Depending on how long you’ve been in the automotive industry, you have probably heard about used car dealer floor plans. They are designed to give independent auto dealers flexible financing options. With a floor plan line of credit, dealers are able to cover inventory expenses and keep cash in hand.
To put it simply, used car dealer floor plans work almost like a credit card made solely for purchasing inventory. Like a credit card, a floor plan company extends a line of credit to a car dealer. Dealers can then use their floor plan line of credit to purchase inventory from auctions and other inventory sources. If a dealer purchases a car on a floor plan, takes it back to their lot and it doesn’t sell within a contractually determined number of days, dealers are charged a small fee. As a dealer sells their inventory, they pay back the original loan.
Floor plan companies can offer guidance, resources, and services. If you feel loyalty to your current lender, ask yourself if they are dedicated to your dealership’s success. Do they know the ins and outs of inventory financing? 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.
When you take a hard look at your current level of service and compare it to what’s available through a floor plan, the difference should be clear. Loyalty has its place but it isn’t in your bottom line.
It’s no secret that dealers have varying views on used car dealer floor plans. You may have even heard stories about lenders lying to clients or that floor plan companies charge unnecessary fees. We understand if you believe there’s validity to these claims, but we urge you to hear from dealers that utilize floor plans. Former cash-only dealer Chris Tingler used to believe these misconceptions, but now uses a floor plan to grow his business.
Consider this: if used car dealer floor plans are so bad, why do more than 20,000 dealers choose NextGear Capital as their lender of choice? Despite any misconceptions, NextGear Capital doesn’t go against the grain in the industry – we’ve simply found a better way to do things. We offer competitive pricing, transparent fees, expert assistance, cutting-edge technology and services.
Above all, we are dedicated to your dealership’s success. Floor planning services offered by banks and local lenders aren’t always consistently offered, with several financial institutions dipping in and out of the floor planning business. At NextGear Capital, we aren’t going anywhere soon. Backed by the power of Cox Automotive, we are dedicated to serving the financial needs of independent dealers.