Used Car Dealer Floor Plans: The Utility You Need

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.   

Getting started with a floor plan isn’t hard, and floor plan companies offer tools and support to make it easy. To get started with a NextGear Capital floor plan contact us or apply online! 

Executive Leadership Team Changes

CARMEL, Ind.  – NextGear Capital, the automotive industry’s largest floor plan provider for independent dealers, has promoted Lisa Mackie to vice president of portfolio management and Thad Sykes to associate vice president of sales.

Mackie joined NextGear Capital’s executive leadership team in 2017 as vice president of sales and brings with her 25 years of leadership experience in the automotive industry. Before joining NextGear Capital, she worked for Capital One Commercial Dealer Services, Hyundai Capital America, JP Morgan Chase and Ford Motor Credit Company.

Sykes joins the executive leadership team as associate vice president of sales. Sykes has been at NextGear Capital since 2007, most recently serving as a division vice president. He brings more than 25 years of management and customer service experience from his previous roles at American Home Mortgages, Bank of America and Wells Fargo Financial.

“Both Lisa and Thad know NextGear Capital inside out, and their collective experience brings valuable insights, perspectives and leadership to our executive team,” said Scott Maybee, president of NextGear Capital. “Our leadership team is the best in the business, and we all share the common mission of helping our customers fully realize their business goals.”

These changes come after Maybee announced his plans to evolve the way the company works together to enhance the client experience. Part of this strategy includes strengthening the relationship between sales and operations to increase clarity throughout the organization.

A Partnership with a Floor Plan Company

Floor plan companies can help you stay focused and reach your goals. When you open a line of credit, you should feel like you gain a partnership. A floor plan company can provide you with many helpful products and services that can ease the stress associated with running a dealership. 

A True Partner 
The pressure to manage all aspects of your business can be overwhelming to you and your dealership. A floor plan company will partner with you to alleviate this pressure and provide dealer solutions to keep your business running.  

Some companies offer a consultative approach, which means they won’t stand in your way of working independently. When you need help, you will be able to count on a team of experts to help manage business. A company dedicated to clients will often offer dealer resources and regular appointments to touch base to see how they can help your business. It is important that you find a floor planning partner that can offer market insights specific to your dealership and work with you to overcome obstacles in your way. 

Save Time 
A floor plan company should go above and beyond offering a line of credit. Look for a company that offers floor plan products and services designed to save you time. Your time is valuable, and these services can prove extremely beneficial to you and your business.  Title management and release, expedited funding, and account management are all services that man floor plan finance companies offer that can save you time. A title management service that keeps your documentation safe, secure and easily accessible in a cloud-based environment will keep your business organized and running efficiently. In some cases, complimentary vehicle valuations may be offered to help you save time on making sourcing decisions. 

 All these dealer tools and solutions should be easily accessible, so you don’t waste time searching for them. By taking advantage of all the resources a floor plan company offers, you’re positioned for profit and reducing time spent on administrative tasks.  

Cash Stays on Hand 
One of the most common reasons dealers choose to partner with a lender is for the floor plan financing. A floor plan complements your cash buying strategy, making cash available when and where it’s needed, and not completely tied up in inventory.  

When a dealer floors a vehicle, they have no personal investment in the vehicle until the first payment is due, which is typically only a small fraction of the original vehicle value. Depending on a dealer’s contracted terms, that could potentially be 30 days after acquiring the vehicle. Floor planning dealers aiming to turn inventory approximately every 60 days will have very little of their own cash tied up in a vehicle, especially if it sells within that time frame. For example, if there is an opportunity to expand your lot, you can answer with immediate access to funding instead of it being tied up in inventory. This is also extremely beneficial when emergencies or unforeseen expenditures arise. 

At NextGear Capital, we capture what it truly means to be a partner and offer all of the resources listed above. We are dedicated to saving you time and keeping cash in your pocket. Partner with us today! 

How to Increase Your Floor Plan Line of Credit

Your dealership inventory is constantly changing and evolving. Having access to a floor plan line of credit that changes and evolves with your business crucial. In order to keep pace with changes, we developed a way for dealers to request credit increases from the palm of their hand.  

To submit a request to increase your floor plan line of credit, you need to log into our account management platform, Account Portal. Your username and password are determined during onboarding. If you’re having trouble logging into your account, contact Account Portal support.  

Once you’re logged into Account Portal, navigate to the “Dashboard” or homepage. On the dashboard, there should be a section labeled “Credit Information”. Inside that section, find the blue button labeled “Request Credit Increase”. Once you click the button, you will be promoted to answer a few questions.  

The first question is asking which floor plan you would like to extend. Select the line of credit you wish it increase.  

The next question asks if you want the increase to be temporary or permanent. A temporary increase request will be reviewed for a term up to 60 days. This requires a short review to qualify for the temporary increase. A permanent increase will be submitted for review and more information may be needed. In most cases, a full Lending review is required and could result in a new term plan. It is also important to note that not all permanent requests are accepted. If you are unsure if you would like to make a temporary or permanent increase, reach out to your Performance Manager for guidance.  

Once you’ve made those selections, you are asked how much you would like to increase your line of credit by. In the box provided, fill in how much additional capital you would like. Once you do that, you can confirm the request.  

We work diligently to review requests, but please allow 3-5 business days for your request to process. You will be notified by email as soon as your request has been reviewed. 

Exceeding Credit Limit 

If you don’t submit a request for an increase and exceed your floor plan line of credit, there is still a little bit of flexibility. We highly encourage dealers to be proactive in requesting credit increases, but we understand that doesn’t always happen. NextGear Capital dealers that are close to reaching their credit limit can exceed their limit by a small margin before all flooring will be denied. Once you max out your line of credit, you will be unable to floor anything until you pay down your balance.  

To recap, requesting a floor plan line of credit increase is easy! Simply: 

  1. Log into Account Portal 
  2. On the dashboard, find the “Credit Information” section 
  3. Click the blue “Request Credit Increase” button 
  4. Answer the 3 prompted questions 
  5. Wait 3-5 business days 

To get started with a NextGear Capital line of credit, contact us or apply online! 

How to Delegate Your Audits

We know that audits can be a headache for auto dealers. Understandably since audits historically could take 3 to 5 hours to complete. To alleviate stress caused by audits, we created Self Reconciliation inside our account management tool, Account Portal. From a computer or mobile device, you can clear your audits in minutes. But what if you’re not at your dealership? Did you know that you can delegate your audits to another member of your staff? 

If you’re a NextGear Capital client, chances are you have used the Self Reconciliation tool. Since its launch in early 2019, it has quickly proven to be a popular dealer resource. Self Reconciliation saw immediate success, boasting 60% adoption in the first six months. Now, nearly 80% of all NextGear Capital clients have utilized this resource to manage audits on their floor planned inventory.   

Delegating Audits 

At NextGear Capital we understand that you’re not always able to go to your dealership to clear audits. That’s why we created the delegation option within Self Reconciliation. This feature allows dealers who may be out of town the option to pass auditing duties onto one of their employees. There is no need to share your Account Portal log-in credentials.  

For example, a dealer is on vacation with their family but needs to clear an audit. All they have to do is:  

  1. Log into Account Portal from any device 
  2. Navigate to the Audits tab 
  3. Find the vehicle(s) you’d like to clear 
  4. Click the blue icon that says “Email” 
  5. Enter the email address of the staff member you wish to delegate your audits to 

We recommend walking the appointed staff member through the auditing process before handing off the responsibilities. To refresh, simply log in to Account Portal and navigate to the Audits tab where you’ll be prompted to provide photos of: 

  • Driver Front 
  • Passenger Rear 
  • VIN 
  • Odometer 

That’s all it takes to clear your outstanding units in real-time! Did you find this helpful? Click here for more Account Portal tutorials. 

Not a NextGear Capital dealer? Contact us today at 888.969.3721 to get started. 

Financing for Independent Dealers: The Basics

Whether you are just starting out or looking to grow your current business, it’s important to have the capital you need to stock your lot. Having cash tied up in inventory can put stress on the business, which is why there are many inventory financing options for car dealers. These options go beyond a typical bank loan. There are companies, such as NextGear Capital, that specialize in financing for independent dealers.

Floor Plan Financing 

A preferred form of financing for independent dealers is floor planning. The terms “floor plan” and “floor plan financing” get thrown around frequently in dealership and auction circles. But what do these terms mean? 

To put it in the simplest terms, floor plan financing works almost like a credit card made solely for purchasing inventory. Similar to a credit card, a floor plan financing 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. 

With a floor plan, the initial investment needed to buy a particular unit is a fraction of the vehicle’s actual purchase price. As soon as that vehicle sells to a customer, floor planning dealers can see their profits immediately and pay back the initial value of the loan plus interest and fees. They also have the flexibility to keep their cash on hand for other dealership needs. 

Another independent dealer financing option is working with a local bank. It’s important to keep in mind that depending on the type of loan needed for your business, bank funding might be backed with personal assets, such as a home. However, with floor planning, the collateral used is the inventory purchased. For most dealers with floor plan financing, this means it’s not necessary to put down personal assets to receive needed funding.   

It’s easy to get started with a dealer floor plan provider. In most cases you can receive funding without leaving your dealership. Most companies that specialize in financing for independent dealers have online applications. They will review the application and extend a line of credit based on the information provided. 

How to Use Your Funding 

Buying inventory is the upmost priority for any dealership. Without inventory, there is no car dealership. With any independent dealer financing options, 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.  

Using a bank loan at an auction must follow most of the same processes used when buying inventory with cash. This meticulous process can include keeping track of what funds need to be released and personally making sure titles are correctly managed. Though these tasks are not necessarily 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 products and resources that can alleviate some time and effort and improve efficiencies with 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.  

No matter how you choose to fund inventory for your dealership, it’s essential to select the best funding partner for your needs.  

At NextGear Capital, our purpose is to provide financing for independent dealers. To get the buying power and resources you need, contact us.  

 

A Floor Plan Gave This Dealer the Competitive Edge

Just north of Salt Lake City sits the town of Bountiful, Utah where Imran Ahmed’s A.I. Monroe Auto Sales has been serving the local community for the past 4 years. When Ahmed opened his own dealership, he knew that incorporating a floor plan into his business model was the way to go, “I wanted to use a floor plan right away and didn’t want to spend a lot of time shopping around. I initially reached out to some local banks, but the process seemed very difficult.” Ahmed had already been purchasing most of his inventory through Manheim, so when he asked about floor planning, they directed him to NextGear Capital. “I found out that NextGear Capital’s process was much easier and as soon as I heard about the extra products they have to support my business like Account Portal, I was sold.”

Ahmed started out with a $50,000 line of credit but quickly grew to his current $950,000 floor plan in the span of only four years. “I’ve had to prove myself to get that large of a line of credit which hasn’t been easy but with a larger line, I’ve gotten more business and I now floor 100% of my vehicles. NextGear Capital has invested in my dealership significantly and this has been a huge contributing factor to the success of my business.”

Ahmed attributes his use of Account Portal to A.I. Monroe’s successful pricing methodology. “I want our vehicles to spend as little time on the lot as possible, so I make sure that our pricing is aggressive. With Account Portal it’s easy for me to look up a vehicle and see what it’s market value is set at so that if a customer wants to come in and try to negotiate the price, I can rest assured that my pricing will undercut my competitors.”

Another product that Ahmed’s found useful is Self Reconciliation. “With Self Reconciliation for audits, whenever the time comes to report on a vehicle I just login to Account Portal on my phone and take 4 pictures, hit send and I’m done. It used to be a little bit of a hassle when there was a word of the day requirement but now you don’t need one. Having more funds available faster, allows me to acquire more inventory and make more sales. It also gives me room to experiment with vehicles I haven’t purchased before that have higher price margins.”

While he likes using products that help him make money, he also appreciates services like Transportation Financing that help him save money. “Ever since NextGear Capital has offered the option to floor transportation costs it has been extremely beneficial. I used to pay out of pocket for all my transportation and it quickly added up. Sometimes, I’d have $1,000’s tied up in transportation expenses and now that it’s freed up, it allows me to use that cash flow for whatever is needed. Anytime a dealer has the ability to save a little bit of their own capital it goes a long way, and I’m very grateful to have that option.”

When asked if he has any advice for other dealers Ahmed encourages them not to be afraid to embrace technology, “Purchasing vehicles online gives you more buying power because you can bid on multiple vehicles at once instead of just one at a time. For example, I like to use Manheim Express for purchasing. The 360-degree imaging is almost better than a condition report. It allows me to be more efficient by being able to spend more time at my dealership. Without technology like this I don’t think I’d be where I am today.”

Ahmed also credits the support he’s received from his Performance Manager Kat Six on helping him run a more successful business. “Kat contacts me on a routine basis and not only talks to me about things specific to NextGear Capital, but also about things that can improve my business like the best ways to advertise my vehicles. She recommended that I try changing the way I take pictures of my inventory so that it looks better when I list vehicles on our website. She’s also given me some tips on how I can improve my sales by changing the way I interact with my customers.”

When thinking about the future, Ahmed definitely sees a lot of potential. “What’s next for me is a larger piece of land and more vehicles, I want to keep expanding over the next few years. Since I was a kid, I’ve had a passion for cars, and as an adult I still wake up excited every morning to buy them. I view NextGear Capital as a business partner, they have supported the growth my dealership has seen, and in turn, I want to help them grow and see what we can accomplish together.”

Dealer Floor Plans: Finding a True Partner

Dealer meeting with his NextGear Capital RepresentativeThe pressure to manage all aspects of your business can weigh you and your dealership down.  Wearing too many hats gets heavy and slows down the pursuit of your goals.  

Dealer floor plans can help you stay focused and reach your goals. When you open a line of credit, you gain a partnership with your floor plan provider. These floor plan providers can provide you with many products and services that can take some stress off of managing a dealership. 

NextGear Capital acts as a true partner. We won’t stand in the way of your desire to work independently, because that’s what got you here in the first place. But when you need help, you can count on our team experts across Client Experience, Tech Support and Performance Management. We’re here to offer guidance, product tutorials and regular calls with a performance manager who’s dedicated to knowing your business inside and out.  

When you drill down what makes your business tick, it is overly complicated? Probably not. Your formula for winning isn’t about the intricate strategies or micro-managing every aspect of operations. That’s why at NextGear Capital, we don’t aim to overcomplicate things. You work hard and we want your floor plan to work hard for you.

Benefits of Dealer Floor Plans 

  • More free capital– You have the ability to keep cash on hand and purchase inventory on your line of credit. 
  • Easy to use dealer floor plan products– For example, Self Reconciliation can clear audits in less than 10 minutes from a mobile device! 
  • Expedited funding– Rapid Pay’s expedited funding feature can initiate financing for non-auction purchases once notice of title is given, meaning dealers can get paid even faster on non-auction units. 
  • Consumer loan payoff programs– Quit paying for trade-ins and consumer loan payoffs out of pocket. Save time and money by letting NextGear Capital take over the consumer loan. 
  • Title management and release– NextGear Capital will manage and store titles for all floor planned vehicles. 
  • Account Portal– Real time account insights and management from a computer or mobile device. 

Much like our approach, our story is simple too. Humble beginnings that started in a small room staffed with just a handful of employees. We’ve been there and done the startup- just like you. We worked our way up and weathered the economic storm. Like you, we believe in this industry and see the success you’re working toward as attainable and real.  

But maybe you’re hesitate to deal with a big company and would rather maintain that personal relationship with a local bank. The problem there is your friendly bank is leveraging other accounts you have there, not immersing itself in what you do. All we do is floor planning and the bulk of our portfolio is made up of independent dealers.  

We believe in the relationship and the power of a strategy that drives your success. When you partner with NextGear Capital, the possibilities are endless because we’re driven to help you get the most out of your floor plan. 

For more information on dealer floor plans and partnering with NextGear Capital, contact us or apply now! 

The Power of Technology with Floorplan Financing

Running a dealership requires cars, cash and inventory management. But where are you investing the bulk of your time each day? Are you out winning auctions or are you knee deep in administrative work? Money could be leaving the dealership because you’re not able to invest in what actually impacts your bottom line. Partnering with a floorplan financing provider could provide you with the tools you need to be successful.

NextGear Capital has created technology and dealer resources to keep you focused on what’s important to your business.

Title Management

Managing titles can be time consuming and sometimes expensive for a dealership. Titles can be easily misplaced with other paperwork, or even damaged if stored incorrectly. Hiring someone to oversee the title process could affect your bottom line.

With floorplan financing from NextGear Capital, you are offered title management services on every floor planned vehicle. Title management helps keep documentation safe, secure and easily accessible in a cloud-based environment. Titles are shipped to our corporate office to be stored in our state-of-the-art facility, The Vault. Upon receipt, titles are scanned in then uploaded directly to your Account Portal where they can be viewed in full color, 24/7. Dealers have the ability to easily view and manage titles from a mobile device or desktop, even if they’ve been paid off.

Account Portal

Account Portal is our account management platform that is accessible from almost any device- desktop or mobile. The platform is an easy to use tool that gives you a detailed look into your floorplan financing account, including a comprehensive dashboard that features analytics and payment history.

Account Portal also offers features such as Rapid Pay, Self-Reconciliation, and AutoPay. These tools allow dealers to receive expedited funding, streamline the auditing process, and avoid late payments. To see all of our products, please visit our Floor Plan Products page.

By taking advantage of Account Portal’s features, you are positioning yourself for success. With these features, you’re able to avoid unnecessary fees that can result from manually managing your business. For a more detailed look into Account Portal, check out our Account Portal tutorials.

Having a floorplan financing lender who harnesses the power of technology to constantly evolve and produce products that give you simple, flexible and transparent ways to enhance your business is key to any dealer’s success. To start floorplan financing, apply here or contact us.

Make Your Cash Work with Floor Plan Financing

If you’re someone who has shied away from using a floor plan financing provider because you take pride in being cash-only, you could be missing out on some of the great benefits floor planning has to offer. Using floor plan financing doesn’t always mean you need financial help. Consider complementing your cash buying strategy with a floor plan and keep cash in your pocket. 

What is floor plan financing?  

Similar to a credit card, a floor plan financing 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 and doesn’t sell it within a contractually determined number of days, they are charged a small fee. As a dealer sells their inventory, they pay back the original loan.  

With a floor plan, the initial investment needed to buy a particular unit is a fraction of the vehicle’s actual purchase price. As soon as that vehicle sells to a consumer, floor planning dealers can immediately realize profits, pay back the initial value of the loan plus interest and fees, and had the flexibility to keep their funds working for their dealership. 

 

How does this benefit dealers?  

One of the main benefits of floor plan financing is that cash does not get tied up in inventory. Since you can place inventory on your floor plan, dealership keep cash on hand. In addition, the line of credit gives dealers immediate access to funding for emergencies or unforeseen expenditures. 

Trying to convert cars back to cash is a hassle and a drain on you with investments in time, travel and paperwork. Floor planning can help you finance nearly any type of remarketed inventory, freeing up cash flow for the things that make the most impact on your business. You could use that cash to open a service center, make lot improvements or advertise.  

At NextGear Capital, we offered Tiered Pricing. This means dealers no longer pay the same fees for a $2,000 vehicle that they would for a $12,000 one. In fact, with Tiered Pricing floor plan fees are based on your purchase price- nothing more. It’s straightforward savings with flexible terms that complement your buying style. Dealers that have taken advantage of Tiered Pricing have seen up to 65% savings on their flooring costs. 

NextGear Capital is innovating the industry in other big ways too. Expedited funding is at your fingertips with Rapid Pay. Floor plan units from your mobile device, overnight titles at no cost and expedite funding requests from any device. We have streamlined the flooring process so now all dealers have to do is acquire inventory when they need it.    

The application process to get started with floor plan financing is relatively quick and easy. To get started, apply here or contact us for any additional questions.