Floor planning is defined as a form of financing for large ticket items displayed on showroom floors or lots. These short-term loans allow dealers to purchase items upfront and then repay as the items are sold.
A floor plan is a type of financing which acts as a revolving line of credit or short-term loan given to a business to purchase inventory. If a dealer wants to purchase inventory they can use their floor plan line of credit whether they are at an auction, taking in a trade, or through any other source of purchasing inventory. This type of financing is beneficial for businesses that experience fluctuations in cash flow and need to acquire extra inventory before busy seasonal periods.
Automobile dealerships use floor plan financing to acquire inventory. If a dealer wants to purchase cars at an auction or outside an auction to fill their lot, they can take a loan or line of credit from the floor plan finance company to buy those cars. The dealership then repays the lender when the vehicle is sold or the loan matures, whichever comes first.
The auto industry has dealerships of every shape and size which have unique needs and customer bases. Financers that offer floor plan financing, like Floorplan Xpress, can often customize the terms of an agreement to meet the needs of the car dealer.
