To build a profitable and thriving dealership, auto dealers have to utilize a number of tools. Some of these tools handle inventory management, sales and reconditioning, all necessary in daily dealership operations. However, arguably one of the most useful tools in a dealer’s “toolbox” is their auto floor plan lending solution.
For the most part, dealerships thrive based on a dealer’s ability to sell vehicles. Dealers sell vehicles, make money off the sale and use the sale proceeds to pay for dealership operating expenses and additional inventory. However, only using the funds from previous sales to purchase more inventory and cover other expenses can severely limit dealership operations and growth.
Auto floor plan lending providers give dealers a line of credit made solely to purchase vehicles from auctions and other inventory sources. If a dealer puts a vehicle purchase on their floor plan, they have a contractually determined number of days to sell the vehicle before a small fee is charged. Once the vehicle is sold, dealers pay back the original loan and any associated fees.
With auto floor plan lending, dealers are able free up their cash flow so they don’t have to use large portions of saved dealership cash to purchase vehicle inventory. Profits from vehicle sales can instead be used to grow and expand other necessary dealership operations instead of purchasing vehicles to retail.
Beyond just giving dealers needed purchasing power, auto floor plan lending companies are uniquely familiar with a dealer’s needs and often offer a variety of other dealer-specific benefits. Some of these benefits include title services—dependent on a dealer’s state—records management, collateral protection and powerful account management tools. Additional benefits include
The additional buying power and benefits a floor plan line of credit provides can be a serious game-changer for automotive dealers. Considering adding a floor plan to your dealership’s toolbox? Let us know!