Floor Plan Financing

Category: finance

A revolving credit line used by car dealerships to pay for the vehicles sitting in their inventory.

Dealers don’t "buy" their inventory upfront. They take a loan from a bank to fill the lot. Every day a car sits on the lot, the dealer owes interest on that loan (the "floor plan expense"). This is why dealers are so eager to move cars with low turn rates.

Common Examples

• The high inventory volume is straining our floor plan financing costs, forcing the sales team to accelerate promotions on the remaining stock.
• Efficient dealership management revolves around balancing sufficient inventory availability against the rising interest cost of floor plan financing lines.