Every term independent dealers need to know about floor plan financing, inventory management, and dealership operations — explained in plain language.
A marketplace where dealers buy and sell vehicles, either in-person or online. Auctions are one of the primary inventory sources for independent dealers using floor plan financing to stock their lots.
The amount of money a floor plan lender provides to a dealer for a specific vehicle purchase. Each advance is typically a percentage of the vehicle's wholesale value and is secured by that vehicle as collateral.
The percentage of vehicle funding requests that a floor plan lender approves. A higher approval rate means more flexibility for dealers to acquire inventory quickly without delays.
Assets pledged to secure a loan. In floor plan financing, the vehicles purchased with the credit line serve as collateral. The lender holds the titles until the vehicles are sold to end buyers.
The maximum amount of financing a floor plan lender extends to a dealership. Dealers draw against this line to purchase vehicles and repay it as inventory sells, making it a revolving form of credit.
A required partial payment on a floored vehicle after it has been on a dealer's lot for a set number of days. Curtailments reduce the outstanding balance and incentivize dealers to move aging inventory.
A revolving line of credit specifically designed for auto dealers to finance vehicle inventory. The dealer borrows against each vehicle and repays the lender when the vehicle sells to a retail customer.
A state-issued license that authorizes a business to buy and sell vehicles. Most floor plan lenders require an active dealer license before extending a credit line.
The average number of days it takes a dealership to sell a vehicle after acquisition. Lower days-to-turn indicates faster inventory movement and typically lower floor plan interest costs.
A type of short-term, revolving credit line that allows auto dealers to purchase vehicle inventory without paying the full cost upfront. Dealers repay the lender as vehicles are sold, keeping cash available for operations.
A verification process where the lender inspects a dealer's lot to confirm that all financed vehicles are present and accounted for. Audits ensure compliance and help maintain a healthy lending relationship.
A one-time fee assessed when a vehicle is placed on a dealer's floor plan. This fee, along with interest, represents the cost of financing each unit. It is typically charged once per vehicle regardless of curtailments.
A financial institution or auto finance company that extends floor plan lines of credit to dealerships. Providers like Floorplan Xpress specialize in working with independent dealers and offer tailored support.
The time it takes for a floor plan lender to approve and release funds for a vehicle purchase. Fast funding allows dealers to act quickly at auctions and secure the best inventory before competitors.
A car dealership that is not affiliated with a specific manufacturer or franchise. Independent dealers sell used vehicles from multiple brands and often rely on floor plan financing to maintain competitive inventory levels.
The cost of borrowing expressed as a percentage. In floor plan financing, interest accrues on each floored vehicle from the date of purchase until it is sold and the advance is repaid.
A broad term for loans used to purchase merchandise for resale. Floor plan financing is a specialized form of inventory financing designed specifically for vehicle dealers.
The number of times a dealer sells and replaces their entire inventory over a given period, usually measured annually. A higher turn rate generally indicates efficient operations and healthy cash flow.
A flexible loan arrangement where a lender sets a maximum borrowing limit. Dealers can draw funds up to this limit, repay them, and borrow again. Floor plans operate as revolving lines of credit.
The physical location where a dealership displays vehicles for sale. Effective lot management, including layout and vehicle presentation, directly impacts sales velocity and floor plan costs.
The total cost of carrying inventory on a floor plan after accounting for fees, interest, and any credits or incentives. Dealers track this metric to evaluate the true cost of their financing arrangement.
The act of repaying the floor plan advance on a specific vehicle, typically triggered when the vehicle is sold to a retail customer. Timely payoffs keep a dealer's account in good standing with their lender.
The original amount borrowed on a floor plan advance, not including interest or fees. As vehicles sell and dealers make payoffs, the outstanding principal decreases.
A type of credit that replenishes as the borrower repays. Floor plan financing is revolving: when a dealer sells a vehicle and pays off the advance, that capacity becomes available to finance another vehicle.
The process of restocking a dealer's lot with new inventory after vehicles are sold. A well-managed floor plan enables continuous replenishment without cash flow gaps.
A bond required by most states as part of the dealer licensing process. It protects consumers and the state against fraud or misrepresentation by the dealership.
A fee charged by the floor plan lender each time a new vehicle is added to the dealer's line. Similar to a floor plan fee, it covers the administrative cost of processing the advance.
The legal document proving ownership of a vehicle. In floor plan arrangements, the lender typically holds the title as security until the dealer sells the vehicle and repays the advance.
See Inventory Turn Rate. The frequency at which a dealer cycles through their entire inventory. Faster turns mean lower carrying costs and a healthier floor plan balance.
The percentage of a dealer's total floor plan credit line currently in use. Lenders monitor utilization to assess risk, while dealers manage it to maintain buying flexibility.
The purchase or sale of vehicles between dealers, at auction, or through other trade channels rather than to retail consumers. Wholesale pricing is the basis for floor plan advance amounts.
Floorplan Xpress makes floor plan financing simple for independent dealers. Transparent terms, local support, and fast funding so you can focus on selling cars.