The concept of a dealer floor plan is pretty simple: a floor planning lender gives a dealer a line of credit to purchase inventory. However, in the context of daily dealer activities, how does a dealer floor plan work? From winning a bid at a local auction to moving inventory to your lot, there are many unique advantages that a dealer floor plan has to offer, including ease of use and expediting the buying process. Below we have listed the general process for floor planning at an auto auction.
How does a dealer floor plan work? It typically begins at an auto auction…
Using a line of credit begins when a dealer wins a bid for a vehicle at auction. Typically a dealer will be asked how they want to pay for the vehicle. For dealers with a floor plan, they will tell the auction to use the line of credit from their floor plan provider to pay for the purchase.
From that point, the auction will check on the dealer’s line of credit. The auction will send information about the dealer’s purchase to the floor plan provider for funding and approval. Once the purchase is approved by the floor planning lender, the auction will stamp and approve the bill of sale or vehicle gate pass. This shows that the car was paid for, and means that the dealer will be allowed to leave the auction premises with the vehicle. Some dealers will use third party transportation, like Ready Logistics or Central Dispatch to take vehicles back to their dealership lots.
Though each step of the floor plan process is spelled out above, the floor planning experience is extremely simple for dealers purchasing inventory. Do you have questions about how floor planning can benefit your dealership’s business plans? Reach out to your local NextGear Capital representative to learn MORE.