the Best Financing For Independent Dealers

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Independent dealer looking at financing options

Independent dealers rely on capital to run a successful business. It’s not uncommon for dealers that were previously operating with only cash on-hand to realize they may need extra funding. Luckily, there are several options when looking for financing for independent dealers. Most prominently, those options are typically a loan from a bank, or funding from a floor plan financing provider. If you’re considering either of these options, it’s crucial to educate yourself on the differences so you can get the best financing for your dealership.

Getting Started

When researching financing for independent dealers, it’s important to look at what each loan entails. For example, bank loans might be backed with personal assets, such as a home. With a floor plan provider, the collateral used is the inventory purchased. For most dealers, this means it’s not necessary to put down personal assets to receive needed funding. 

 In most cases, it’s easy to get started with a dealer floor plan provider. They will extend a line of credit depending on your credit score and information provided in the online application.

How to Use Your Funding

With any financing for independent car dealers, there’s a purchasing process involved to acquire inventory from auction and non-auction sources. Depending on the source of funding, what’s required from a management standpoint can vary widely. 

 Unfortunately, using a bank loan at an auction must follow most of the same processes used when buying inventory with cash. This sometimes-lengthy process can include keeping track of what funds need to be released and personally making sure titles are correctly managed. Though these tasks do not seem difficult to accomplish, they certainly take up a dealer’s valuable time and effort.  

 Independent dealers that use a floor plan provider to buy inventory have access to auxiliary services that can alleviate some time and effort from those administrative tasks. Floor planning dealers can purchase inventory with the confidence that the auction and seller will be properly compensated. In addition, title management is handled on the dealer’s behalf, further saving time and effort for dealers. 


Some dealers have specific types of inventory they like to stock. In most cases, banks have certain restrictions on types of vehicles you can purchase. Those restrictions are based on a vehicle’s mileage, make, model, or year. Unfortunately, those vehicle limitations can significantly reduce a dealer’s potential pool of available units and subsequently, their cash flow.  

If a dealer chooses a floor plan provider, there are often fewer restrictions on the types of inventory that can be financed. Dealers can purchase a wider variety of in-demand units to retail to consumers. 

The Best Option?

For some, the most important factor when looking at financing for independent dealers is finding a lender that is going to stick around. It’s important to have the assurance that a funding provider is going to act as a partner. 

 Floor planning services offered by banks and local lenders aren’t always consistently offered. Over the years, several 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. 

No matter what lender you choose for your dealership, whether a bank floor plan or a floor plan lender, it’s essential to select the best funding partner for your needs. 

At NextGear Capital, we are dedicated to providing financing for independent dealers. To get the buying power and resources you need, contact us.