What is a Dealer Floor Plan? | How Dealer Floor Plans Work & How to Get One
⏱️ Timestamps: 0:00 – Introduction: What is a Dealer Floor Plan? 0:45 – Dealer Floor Plan Explained: Financing Your Vehicle Inventory 2:10 – How a Floor Plan Works: Line of Credit for Your Dealership 3:30 – Example: Buying and Selling a Vehicle with a Floor Plan 4:50 – Interest, Repayment, and Monthly Obligations 6:15 – Benefits of a Dealer Floor Plan: Cash Flow, Flexibility, and Growth 7:40 – Considerations: Interest Costs, Inventory Risk, and Lender Relationships 9:05 – Risks of a Floor Plan: Why Many Dealers Fail 10:50 – Advice for New Dealers: Start Small and Manage Debt Carefully 12:30 – Where to Get a Floor Plan: Banks, Dealer Auctions, Lenders, and Private Investors 14:15 – Floor Plan Providers: Next Gear Capital, Westlake Financial, Ally, AFC, First Business Bank 16:00 – Special Features: Flex Plans, Lien Releases, and Inventory Management Tools 17:20 – Personal Story: My First Floor Plan Experience and Lessons Learned 19:10 – Tips for Success: Paying Off Your Floor Plan and Operating a Cash Inventory 20:45 – Closing Advice: Grow Your Dealership Safely and Profitably
Are you ready to learn what a dealer floor plan is and how it can help you grow your car dealership? In this video, I’ll explain everything you need to know about dealer floor plans, how they work, the risks involved, and how to obtain one RIGHT NOW.
A dealer floor plan is essentially a loan or line of credit specifically for your vehicle inventory. Instead of paying for cars upfront, you can borrow against your floor plan to purchase vehicles from auctions or other sources and put them on your lot for resale. Think of it like a revolving credit line for your dealership.
Here’s how it works:
Initial Purchase: Apply for a floor plan to obtain a line of credit based on your creditworthiness.
Inventory Acquisition: Use the approved credit line to buy vehicles, usually from dealer auctions, and add them to your inventory.
Interest & Repayment: When you sell a vehicle, you pay down the portion of the floor plan used to purchase it. Most floor plan providers require monthly interest payments, similar to a credit card.
Benefits of a Dealer Floor Plan:
Improves cash flow by conserving cash for operations like payroll and marketing.
Allows flexible inventory management to respond to market demand.
Supports growth by enabling the purchase of more vehicles without huge upfront costs.
Considerations & Risks:
Interest costs can fluctuate and add up quickly.
Inventory held too long may depreciate, leading to potential losses.
Failing to make payments can result in repossession of your vehicles. Many dealerships fail due to overextending on floor plans.
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Pro Tips:
Start small, with a manageable floor plan, e.g., $25,000 for 7-8 vehicles.
Keep at least 6 months of minimum payments in cash to cover slow sales periods.
As you build credibility with your floor plan provider, you can gradually increase your credit line.
Some floor plan providers offer “Flexing,” allowing you to pay for vehicles only after they sell.
Where to Get a Floor Plan:
Banks, dealer auctions, floorplan lenders, and private investors.
Popular providers include Next Gear Capital, Westlake Financial, Ally, AFC, and First Business Bank. Many are affiliated with dealer auctions or industry platforms like Cox Automotive.
Final Advice: Manage your floor plan carefully. Starting small and paying down debt quickly allows you to eventually operate on a cash inventory, maximizing profits and reducing interest costs. This approach can set you up for long-term success and financial freedom in the dealership business.
Whether you’re new to the car business or looking to expand your dealership, understanding floor plans is crucial for growth, cash flow management, and avoiding common pitfalls.
💡 Start smart, manage your debt, and watch your dealership thrive!
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By: Dealer Training Title: “Dealer Floor Plans Explained: How to Finance Your Car Lot Like a Pro” Sourced From: www.youtube.com/watch?v=2BkQWn8Ii50
