Define Floor Plan Financing

Information and translations of floor plan lending in the most comprehensive dictionary definitions resource on the web.

Define floor plan financing.

A form of retail goods inventory financing in which each loan advance is made against a. A floor plan is a method that a business such as an auto dealership can use to finance inventory that they are holding for resale without having to tie up their own capital in that inventory. Floor plan finance companies are uniquely attuned to the needs of auto dealers. These loans are made against a specific piece of collateral i e.

Floor planning is a form of financing for large ticket items displayed on showroom floors. For example automobile dealerships utilize floor plan financing to run their businesses. An auto rv manufactured home etc. The stands4 network.

When each piece of collateral is sold by the dealer the. Contrary to common perceptions most car dealers do not pay cash for the. Floor planning is commonly used in new and used car dealerships. Floor plan finance options are popular within the automotive industry.

With floor plan financing you will work with a third party financing institution a floor plan financing company to. Meaning of floor plan lending. For example a dealer might be able to borrow 10 million over the year to purchase 300. However not all inventory finance companies offer retail and dealership wholesale financing options.

While some lenders are unable to properly serve independent dealers nextgear capital has proudly served the independent dealer market for over ten years our floor plan financing options allow dealers to finance nearly any. Floor plan financing is a revolving line of credit that allows the borrower to obtain financing for retail goods. Floor plan lenders include local and regional banks large national banks and financing companies owned by the manufacturing companies like toyota financial or ford credit. How does floor plan financing work specifically to benefit auto dealers.

The dealer then receives payment hopefully including a profit and remits the balance to the lender who in turn releases the title to the car to the new purchaser. The loans are often made with a one year term and based on an aggregate budget. Using cash or a bank line of credit to purchase inventory can work for some car dealers but many floor plan financing companies offer a variety of dealer specific benefits. As each piece of collateral is sold by the dealer the loan advance against that piece of collateral is repaid.

Retail floor planning also referred to as floorplanning or inventory financing is a type of short term loan used by retailers to purchase high cost inventory such as automobiles these loans are often secured by the inventory purchased as collateral.