One of the biggest concerns dealers have when deciding to floor plan is the costs and interest rates. Dealer floor plan interest rates may seem daunting, but when managed properly, can benefit your business.
Using a car dealership floor plan ensures that a dealer can have extra capital on hand when it is needed. If a dealer only uses cash to purchase inventory, a dealer can only get that cash back if they sell the vehicle, either to a consumer or through other channels such as an auction. Selling a vehicle for extra cash can take time, and sometimes dealership expenses can’t wait.
Choose the right floor plan provider
When looking at floor plan providers, it’s important to find one that offers dealership floor plan options. No two dealerships are exactly alike, and their floor plans shouldn’t be either. Unfortunately, some floor plan finance companies do not offer a variety of plans, causing some dealers to get stuck with fees and services they do not need.
An example of floor plan customization would be NextGear Capital’s Tiered Pricing. This is a unique feature that bases floor plan fees on purchase price, not fixed or promotional terms. For example, a dealer who floors a $2,000 unit does not have the same flooring costs as a dealer who floors a $12,000 unit. This keeps cash on hand versus tied up in inventory, creating a more profitable way to manage a dealership.
Just because there are fees associated with floor plans, does not mean with dealers aren’t seeing savings. In fact, our dealers are seeing savings up to 65% on their flooring costs since they started using Tiered Pricing.
Make payments on time
Submitting payments on time is the easiest way to avoid extra fees and an increase in dealer floor plan interest rates. One way to ensure you never miss a payment is by enrolling in Auto-Pay. Available via Account Portal, AutoPay allows dealers to focus on daily operations without the worries of a potential missed payment. Enrolling in AutoPay is a quick and easy process, and free for all NextGear Capital dealers.
Take advantage of promotions
Most floor plan providers offer special promotions from time to time! NextGear Capital tends to run promotions seasonally, for more information on these promotions, be sure to follow us on social media. Promotions can offer great terms, making it even more affordable to floor plan.
To stay up to date on promotion information, follow us on Twitter and Facebook.
Want more information on dealer floor plan interest rates? Contact us today!