Floor Plan Lending Definition

Dealers can then use their floor plan line of credit to purchase inventory from auctions and other inventory sources.

Floor plan lending definition.

Retailers use a short term loan to purchase inventory items and the loan is repaid as inventory is sold. What you don t realize is that like most new car dealers a floor plan was used to finance the cars. Financing the operations of a car dealership requires a specialized type of loan called a floor plan line of credit. Floor planning is commonly used in new and used car dealerships.

Find out how nextgear capital dealers are tackling the challenges of today s market head on by properly utilizing their lines of credit. Supplementing working cash with a floor plan is a tried and true method to grow business. Floor plan lending noun also known as wholesale lending a form of retail goods inventory financing in which each loan advance is made against a specific piece of collateral. Advances under the facility are made against specific automobiles as collateral.

When each automobile is sold the loan advance against that particular piece of collateral is repaid. Retail floor planning also referred to as floorplanning or inventory financing is a type of short term loan used by retailers to purchase high cost inventory such as automobiles. This booklet applies to the occ s supervision of national banks and federal savings associations. Floor plan lending is a form of inventory financing for a dealer of consumer or commercial goods in which each loan advance is made against a specific piece of collateral.

Local dealerships purchase their inventories through financing called floor plan lending here s how it works. These loans are often secured by the inventory purchased as collateral. Much like a credit card a floor plan financing company extends a line of credit to a car dealer. This booklet addresses the risks associated with floor plan lending and discusses risk management practices for floor plan lending.

How to pronounce floor plan lending. Floor planning is a type of inventory financing for large ticket retail items.