Floor Plan Financing Requirements

If this dealer s holding cost per day per unit is 44 63 and their turn time to sell a car is 60 days they will spend 2677 of their profit holding on.

Floor plan financing requirements. This type of inventory financing becomes an important source of capital that a bank can provide to the dealer. The basics first and foremost to qualify for a floor plan you need to have credit. Let s say you make a profit of 3 000 per car sold. The arrangement is most commonly used when large assets such as automobiles or household appliances are involved.

Yet while there is a good chance you will be able to acquire a floor plan line of credit the size of that line of credit will vary depending on your business needs and overall portfolio snapshot. If your holding cost per day per unit is 44 63 and your turn time is 60 days you will spend 2677 of your profit holding on to a non selling car. Let s say a dealer makes a profit of 3000 per car sold. A floor plan borrower typically has stronger asset liquidity than other commercial.

These floor plan finance formulas incorporated with your turn time can help to make or break your dealership s profitability. 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. These floor plan finance formulas incorporated with a dealer s turn time can help to make or break a dealership s profitability.