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What is floorplanning and why should automotive dealers be interested?

What is floorplanning and why should auto dealers be interested

Whether you’re new to dealership management or a legacy owner, you know that cash is king and managing cash flow is a daily, hands-on activity. Even the most successful and profitable dealerships can get into a cash crunch every now and then. The good news is that there is a financing option specifically for independent automotive dealers to prevent this from happening called a floorplan. Working with an inventory financing company like AFC can provide credit opportunities and cash flow flexibility that can fuel dealership growth opportunities.

What is a floorplan?

In the automotive industry, a floorplan, or floorplanning, is a type of loan available through a finance company that provides a revolving line of credit, allowing an automotive dealer to obtain financing to purchase inventory. These loans are made for various types of inventory like a passenger vehicle, RV, or a motorcycle. When the dealer sells the vehicle off the lot, the loan advanced against the financed inventory is repaid to the financing company. It’s kind of like using a credit card.

How can floorplanning help automotive dealers?

  • Leveraging an inventory financing company gives you the freedom to use your money where you need it—like in payroll or building expenses—instead of having all your cash tied up in inventory on the lot.
  • Floorplanning can enable you to sell more cars by providing more options on the lot for potential buyers.
  • Near the end of an auction, after you’ve already made several purchases, you may be strapped for cash and unable to buy that final vehicle you know will sell—but a floorplan line of credit allows you to secure that additional inventory on the spot. And more vehicles mean more sales!

And while you can find financing opportunities in lots of places—including a business line of credit or a home equity line of credit—a traditional floorplan comes with some other unique benefits, particularly when you open one with AFC.

3 extra perks of an AFC floorplan

  • Quicker check-out. By using your AFC floorplan instead of cash at checkout, dealers can quickly and easily add a vehicle to their line of credit—using cash means additional paperwork (and more time wrapping up the purchase).
  • Auction intermediary. When you have an AFC floorplan, your local branch can assist with arbitrations, title issues, obtaining gate passes, and other auction-related issues so you can focus on other business needs.
  • Cash flow protection. AFC offers financial flexibility with a $0 principal curtailment program called Principal Pass™. You may elect to use the feature whenever you want, and it won’t impact your existing contract terms.

Why should automotive dealers finance with AFC?

Beyond the particular benefits of an AFC floorplan, there are a number of great reasons to work with us to finance your inventory in general. For example:

  • We’ve been in the business longer than anyone else in the industry (more than 35 years) and we understand the business model of a car dealership and the unique challenges you face every day.
  • We work with more than 15,000 independent dealers in the retail and wholesale automotive space as well as RV dealers, powersports and commercial truck dealers, salvage buyers, and rental operators including vehicles used for ridesharing like Turo or HyreCar.
  • We are an accepted form of dealer payment at more than 1,300 inventory sources (both online and in person) across the U.S. and Canada, so you can truly shop practically anywhere you want.
  • We have a hybrid service model, meaning dealers can choose to visit one of our local branches, transact digitally on the AFCDealer® platform, or have a member of our team meet you on your lot.
  • Our dealer account platform, AFCDealer®, allows you to conduct business 24/7 with special features like flooring non-auction purchases, personalized account notifications, and title management. It’s available for both desktop and mobile use.

A floorplan line of credit can truly be the key to a dealer’s business growth. If you’re interested in learning more about what AFC can do to fuel your business dreams, contact us.

Disclaimer: 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.

“AFCDealer®” and “Principal Pass™” are trademarks of Automotive Finance Corporation.