The dealer borrows money through what’s called “floor plan financing” in order to keep the inventory on their lots. Floor plan financing is a type of short-term loan that is paid off in 30 to 90 days, the time it normally takes to sell a car. A typical new car costs a dealer about $5 to $10 in interest per day.

How do auto dealer floor plans work?

Much like 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. As a dealer sells their inventory, they pay back the original loan.

How do you get a floor plan for a car dealership?

You may obtain a dealer floor plan from a bank or there are many dealer floor plan providers listed by clicking here. You may also go to Google, Bing, or Yahoo and type in “dealer floor plan providers”. You will then find numerous companies that will provide financing for your inventory.

Do cars depreciate on the lot?

A new car depreciates or loses value almost immediately after you drive it off a dealer’s lot. As a quick rule of thumb, a car will lose between 15% and 20% of its value each year according to Bankrate.com.

How fast do used cars depreciate?

Your car’s value decreases around 20% to 30% by the end of the first year. From years two to six, depreciation ranges from 15% to 18% per year, according to recent data from Black Book, which tracks used-car pricing. As a rule of thumb, in five years, cars lose 60% or more of their initial value.

Do dealerships finance their inventory?

Local dealerships purchase their inventories through financing called “floor plan lending.” Here’s how it works: Local dealerships have a better sense than anyone what vehicles will sell best in their markets – cars or trucks, SUV’s or compacts, sports cars, luxury cars or more affordable models.

How does Dealer financing work?

Dealer financing is a type of loan that is originated by a retailer to its customers and then sold to a bank or other third-party financial institution. The bank purchases these loans at a discount and then collects principle and interest payments from the borrower. This is also called an indirect loan.

Is there floor plan financing for used car dealers?

Dealerships rely on a constant stream of inventory to stock their lots. Though dealership savings can be used to purchase inventory, one of the simplest means of acquiring inventory is using floor plan financing for used car dealers.

How can I finance my used car inventory?

Finance your dealership inventory, including demo vehicles, auction purchases, shop rentals, daily rentals and more. Receive a flexible credit line that you can use to buy used vehicle inventory. Directly floorplan your SmartAuction ® purchases. Provides cash incentives to eligible wholesale dealers.

What kind of funding do used car dealers need?

We fund all automotive businesses, including indepedent dealerships, used car dealers, repair shops, service centers, and more. Our expert Funding Advisors will work closely with you to select the best funding option to help you achieve your dealership’s goals without sacrificing cash flow.

Are there credit lines for independent auto dealerships?

AFS is proud to offer financial services of different sorts, including credit lines for independent auto dealerships. The first thing to note about our floor plan financing is how versatile it is.