What is Floor Planning?

Short-Term Financing

Generally speaking, floor planning is a term used for financing inventory in retail operations. Regarding vehicle dealerships, floor planning is specifically involved in the short-term financing of inventory. Lenders typically provide funding for an amount of time (usually 30-90 days) for each vehicle on the dealer’s premises. The vehicle title acts as the primary collateral and the most common practice for floor plan lenders is to be in physical possession of the title until the loan is repaid. Typically, rates and fees applicable in this lending field are high because of transaction costs and collateral risk.

Industry

There are a number of national companies that dominate the industry with relatively few lenders offering programs at a local/community level. While banks have engaged in this type of lending in the past, most internal procedures are unsuited for managing collateral on a per entity basis. These banks have traditionally opted for line-of-credit relationships with franchised dealers without the ability or software to track individual titles and collateral items, thus increasing risk. Furthermore, the propensities towards banking consolidation and other industry changes have further distanced banks from this local lending concept.

Local Opportunity

We believe Dealers First Affiliates and its Tirekicker™ software effectively demonstrates a viable means of entry into this market for great investment returns. Our business model offers a simple and fair way of doing business and encourages strong relationships with local businesses. Our computer software provides both lender and client with concise, pertinent information and can enable you to create a highly competitive profit center.