For independent auto dealerships, effectively managing inventory and cash flow is important for success. While relying on cash has traditionally been the norm for stocking up on inventory, dealer floorplan financing offers a powerful alternative that can provide significant benefits and truly be a game-changer for your business.
What is a Dealer Floorplan?
Think of a dealer floorplan as a revolving line of credit specifically designed to help independent dealers purchase inventory. Instead of tying up your cash on hand, floorplan financing allows you to acquire vehicles from a wide variety of sources—not just auctions. When the vehicle is sold – or when the loan comes due – you simply repay the loan, similar to how a credit card works, but you retain the net profit.
This financial tool allows dealers to acquire new inventory without waiting for previous sales to generate cash.
Want to learn more about floorplan financing? Click here!
The “Do’s” of Smart Floorplan Usage:
When used correctly, a floorplan can be a game-changer for a dealership. Here are the key “Do’s” for strategically using a floorplan:
DO Grow Your Inventory Faster
A well-stocked lot is key to increasing sales. Relying solely on cash for inventory purchases can create a challenging cycle, especially for growing dealerships, as it requires large cash reserves or waiting for previous sales to replenish funds — and then using those funds to purchase more inventory.
A floorplan line of credit can increase your buying power at auctions, whether in-lane or online by giving you access to funding. This means you can:
- Place bids and purchase inventory in greater volume when prices are favorable.
- Reduce the risk of missing out on profitable deals due to financial constraints or a lack of available cash.
- Confidently bid on a wider range of vehicles, knowing you have the financial backing to acquire more of the inventory you need to drive your business forward.
The additional profit generated from moving more vehicles through your lot can offset the financing costs, making it a true growth engine for your business.
DO Improve Your Dealership’s Cash Flow
One of the most significant advantages of a floorplan is its ability to free up operating cash. Instead of using cash solely for inventory purchases, these funds can be used for other essential business needs that keep your dealership thriving. This financial flexibility allows you to reinvest funds into improving dealership operations, such as:
- Facility upgrades and maintenance
- Marketing initiatives
- Payroll
Reinvesting in other areas of your business ensures that all aspects of your dealership remain strong as your inventory grows. With AFC, you can finance your inventory and invest in other important areas of your business.
DO Match Financing to Your Needs
Maintaining the right inventory at the right time is vital for dealerships, and flexible financing is the key to achieving this. Every dealership is unique, and a good floorplan provider recognizes this by offering flexible and tailored solutions that fit your specific business model and inventory. A floorplan provider can offer a range of options to accommodate diverse dealership needs. For example:
- If you specialize in high-volume wholesale with quick sales, a short-term floorplan can help keep fees manageable.
- For salvage vehicles that require extensive reconditioning before they are frontline-ready, longer terms can make that turn time more financially viable.
- If you deal in specialty inventory like RVs or powersports, you’ll find credit lines specifically designed to cater to those unique sale timelines, often with longer terms and lower curtailments.
The best part is that you are not restricted to a single option; you can have different credit lines for different goals, ensuring your financing aligns perfectly with each new unit you acquire. AFC offers a comprehensive array of financial services, including automotive, salvage, specialty, and fleet financing, all designed to support the unique needs of your business.
Ready to Accelerate Your Dealership’s Growth?*
Don’t let cash flow limitations hold your dealership back. AFC provides the flexible financing solutions you need, from standard dealer floorplans to complex salvage or fleet lines of credit, ensuring you can buy what you need when you need it. Apply today!
Have Questions? We’re Here to Help!
If you have any questions about the application process or how to get started, feel free to visit our Contact Us page.
Prefer to speak with someone directly? Contact us at bdccorporate@autofinance.com or 1-888-335-6675, and we’ll be happy to assist you.*
Disclaimer: Descriptions of AFC floorplans are for illustrative purposes only. Terms of AFC floorplan financing are subject to a final written agreement acceptable 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
