To help maintain current business, dealers will frequently realize they need additional funds, and quickly come to the conclusion that there are typically only a few main funding options available to sustain a dealership. Beyond just dealership cash and funds on hand, dealers are typically left with the choice of using bank floor plans or a floor plan line of credit. If you’re trying to select between a floor plan line of credit or a bank floor plan from a local lender, consider the following questions before making a final choice.
What is the purchasing process like?
No matter what a dealer’s funding source is, there’s a process involved in purchasing inventory from both auction and non-auction sources. However, there are key differences in what happens after a dealer purchases a unit when using bank floor plans versus a line of credit from a floor plan company.
With bank floor plans, dealers have to go through many of the same administrative actions required when using cash. That can include title management and waiting on funds to be released and cleared. This can take up significant amounts time and add on to the number of tasks a dealer needs to complete in a given day.
Buying cars with a line of credit from a floor plan financing company is a much simpler process . Once a vehicle is put on a dealer’s line of credit, funding and title management are all handled by a dealer’s floor plan provider. After floor planning a car, a dealer can essentially leave auction knowing that those other tasks will be handled on their behalf.
Can I buy the inventory I want?
Every dealer has preferences when it comes to buying inventory for their individual markets. However, some bank floor plans or local lenders have restrictions on the type of inventory dealers can purchase based on mileage, and year of a vehicle’s manufacture. Additionally, those type of lenders may not fund the whole amount to purchase a piece of needed inventory.
Floor plan companies often have fewer restrictions on the type of vehicles dealers can finance. That means dealers can get more of the inventory they want, without tying up the use of dealership cash.
Can I rely on my financing?
Dealers have to be able to rely on getting their funding for inventory when and how they need it. Unfortunately, floor planning services offered by banks and local lenders aren’t always consistently offered. Over the years, a number of financial institutions have been in and out of the floor planning business, and support and attention for those efforts waver depending on the profitability of the bank or local lender’s floor planning program.
Financing inventory for dealers is the sole focus of a floor plan company. Beyond just a consistent record of providing funds to car dealers over the years, floor plan providers offer a partnership steeped in years of experience in the industry.
Whether or not a dealer gets financing from a bank floor plan, local lender or floor plan financing company, every dealership needs a financing partner that fits their individual needs.