Floor Plan Financing
A revolving line of credit a dealership uses to finance its inventory, paying interest per vehicle until each car sells and the advance is repaid.
Floor plan financing, also called floorplanning, lets a dealer stock more vehicles than its cash on hand allows. A lender advances the wholesale cost of each unit, and the dealer pays a per-vehicle interest charge until the car sells, at which point the advance is paid off. Because interest accrues daily, aged inventory quietly erodes profit, which is why floor plan discipline and quick turns matter to a dealership's bottom line.
Related terms
Days in Inventory
The number of days a vehicle has sat unsold on a dealer's lot, a core metric for turn rate, aging, and holding cost.
SalesWholesale vs Retail
Two price points for the same vehicle: wholesale is the trade or auction value between dealers, while retail is the higher price a consumer pays on the lot.