Managing floorplan payments is an important part of running a successful dealership. When floorplan curtailment payments come due, dealers often face a familiar challenge: balancing payment obligations while continuing to acquire inventory and pursue growth opportunities.
Whether you’re sourcing vehicles at auction, planning inventory purchases or preparing for seasonal demand, maintaining flexibility can make a big difference. The good news is that with the right planning and financing strategy, dealers can manage floorplan payments without losing momentum.
Why Floorplan Curtailments Can Impact Inventory Growth
A floorplan curtailment is a scheduled principal payment made on financed inventory after a vehicle has remained on a floorplan for a set period of time.
Floorplan curtailment payments are a normal part of wholesale inventory financing, but they can affect purchasing decisions when you have multiple demands competing for your available cash. For example, you may have upcoming curtailment payments while also finding good inventory opportunities at auction. Without a plan in place, it can be difficult to balance both priorities.
That’s why many successful dealers focus on managing floorplan payments before deadlines arrive rather than waiting until payments are due.
Strategies for Managing Floorplan Payments
Stay Ahead of Inventory Aging
One of the most effective ways to manage floorplan payments is to keep a close eye on aging inventory.
Vehicles that sit on your lot longer than expected can create additional financial pressure and reduce flexibility when curtailment payments come due. Regular inventory reviews can help you identify vehicles that may need pricing adjustments, additional marketing or a different selling strategy. Bigger picture, regular monitoring and reviews can also help you recognize if you need to tweak or pivot your wholesale inventory sourcing strategy.
Build Curtailment Planning Into Inventory Decisions
Inventory purchasing and payment planning should go hand in hand.
Understanding upcoming floorplan curtailment payments can help you make smarter buying decisions and avoid unnecessary financial pressure. Planning for upcoming curtailments as part of your inventory strategy can reduce unwelcome surprises and help facilitate more cash flow consistency throughout the year.
Focus on Inventory Turn
Inventory turn remains one of the most important factors in dealership inventory growth.
By focusing on vehicles that perform well in your market, you may be able to reduce aging inventory, improve cash flow and maintain greater flexibility when payment obligations arise.
The goal isn’t simply to buy more inventory—it’s to buy the right inventory at the right price.
Why Financing Flexibility Matters
Even the best inventory strategy can’t prevent every challenge.
Market conditions change. Inventory opportunities come up unexpectedly. Customer demand shifts. As a result, you may find yourself managing floorplan payments while also trying to secure inventory you don’t want to pass up.
That’s where financing flexibility can help.
Many dealers look for inventory financing options that help them maintain purchasing power while managing existing obligations. Access to flexible financing solutions can help you continue pursuing inventory opportunities without disrupting broader business goals.
How Principal Pass Helps Dealers Stay Flexible
When curtailment payments come due, you may need to decide how to use available cash across different areas of your business.
For eligible AFC dealers, AFC’s Principal Pass* provides additional flexibility around principal payments on eligible inventory. This can help you continue pursuing inventory opportunities while managing floorplan obligations.
Rather than choosing between making payments and acquiring inventory, eligible dealers can use a financing solution designed to support both financial flexibility and inventory growth.
Principal Pass has long been available to eligible AFC customers in the United States. Now, through the recent launch of Principal Pass in Canada, eligible AFC Canada dealers can access the same financing flexibility to help support their inventory strategy.
Learn More About Principal Pass
Stay Focused on Opportunity
Managing floorplan payments doesn’t have to mean slowing inventory growth.
By staying ahead of inventory aging, planning for floorplan curtailment payments, improving inventory turn and using financing solutions that support flexibility, you can continue pursuing opportunities while maintaining control of your inventory strategy.
To learn more about Principal Pass and how it may support your dealership, contact your local AFC representative today.
Frequently Asked Questions
What is a floorplan curtailment?
A floorplan curtailment is a scheduled principal payment made on financed inventory after a vehicle has been on a floorplan for a set period of time.
Where is Principal Pass available?
Yes. Principal Pass is now available to eligible AFC dealers in both Canada and the US, providing additional flexibility around principal payments on eligible inventory.
How can dealers prepare for floorplan curtailment payments?
Dealers often prepare by monitoring inventory aging, planning ahead for upcoming obligations, focusing on inventory turn and using financing solutions that provide additional flexibility.
* Disclaimer: Terms of AFC floorplan financing are subject to a final written agreement acceptable with AFC. Descriptions of AFC floorplans are for illustrative purposes only. Principal PAss may require an amendment to your contract with AFC. AFC does not guarantee any results for floorplan financing and examples are for illustrative purposes only. Dealers should consult their own advisors to make independent business decisions regarding floorplan financing.
“AFC” refers to Automotive Finance Corporation, Automotive Finance Canada Inc., and AFC Cal, LLC in their respective jurisdictions. All California transactions are through AFC Cal, LLC. California loans will be made pursuant to Department of Business Oversight California Finance Lenders License. Canadian transactions are through Automotive Finance Canada Inc.
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