Floor planning is a type of inventory financing for large ticket retail items. Retailers use a short-term loan to purchase inventory items, and the loan is repaid as inventory is sold. Floor planning is especially used in car dealerships and for major appliances.
What is floor plan debt?
Floor Plan Debt means Debt in an aggregate principal amount at any time not to exceed the value of the Inventory of the Company and its Restricted Subsidiaries, which Debt is secured primarily by a Lien on Inventory of the Company and/or its Restricted Subsidiaries.
How does floor plan finance work?
How does floorplan finance work? … This type of financing provides a revolving line of credit, providing access to the funds you need to purchase inventory for your business and stock the shelves. The way it works is quite simple: the lender pays the manufacturer or distributor for the stock you purchase.
What is floor plan financing interest?
Floor plan financing interest expense is interest paid or accrued on floor plan financing indebtedness. Floor plan financing indebtedness is indebtedness that is used to finance the acquisition of motor vehicles held for sale or lease, and that is secured by the acquired inventory.
How do you get a floor plan for financing?
The application process varies depending on the company. In order to qualify to use a car dealership floor plan, a dealer needs to have credit. Specifically, a history of using credit and paying down debt. Floor plan lenders want to see what a dealer’s credit history is like.
How do I get a dealer floor plan?
A dealer floor plan is a loan for your vehicle inventory. It is a plan to finance the vehicles on your floor. You may obtain a dealer floor plan from a bank or there are many dealer floor plan providers listed by clicking here. You may also go to Google, Bing, or Yahoo and type in “dealer floor plan providers”.
How do you qualify for a floor plan?
First and foremost, to qualify for a floor plan, you need to have credit. Specifically, you should have a history of utilizing and repaying debt. Bad credit and hiccups on credit history aren’t always deal-breakers, but they will likely reduce the amount for which you qualify.
What is floor plan insurance?
Allows you to effectively compete with the manufacturers insurance programs by offering your dealer a product to insure their vehicle inventory. The inventory can include cars, trucks, recreational vehicles, motorcycles, equipment, and manufactured housing dealers.
What is a floor in finance?
A floor can mean one of several things in finance, including the lowest acceptable limit, the lowest guaranteed limit, or a physical space where trading occurs. … Other floor levels are set by a company or person to assure that a price or limit covers their costs and doesn’t fall below a certain level.
How do you calculate interest on a floor plan?
This floor plan finance formula is essentially the following: monthly desired sales divided by how many times a lot is turned per year, multiplied by the number of months in a year. In this situation, the dealer would need to stock 80 units based on 60 desired sales per month and a 40 day average turn time.
What is a floor plan fee?
The first cost is a floor planning fee. This is a flat rate that will be added to your principal balance. Dealer floor plan fees vary slightly depending on credit worthiness and other factors. For example, this fee is around $85 per unit for the first 60 days for some of our dealers.