Retail floorplan


Retail floorplan

Retail floor planning is a business that makes money by doing short term loans secured by collateral it loans for. The costs are usually very high, with interest rates of 28%-40%, as well as a fee to put inventory on the floorplan.

Floor planning is commonly used in new and used car dealerships. [ [http://www.jdpa.com/studies_jdpower/pressrelease3.asp?ID=2005074 J.D. Power and Associates | Press Pass | Press Releases ] ] Few dealers own the vehicles on their lots, most are floor planned by a bank or by the manufacturer.

Floor planning is the cost that dealers pay for loans on autos in their lots. "The dealer borrows the money to buy the cars made by the manufacturer, either from a local bank or from a lender like General Motors Acceptance Corp. The dealer must pay normal interest rates on these car loans. This is called "floor planning," and it can run into hundreds of thousands of dollars a month for a big multidealer who keeps acres of new cars on his lot." [cite journal |title=How To Buy A New Car |journal=Popular Mechanics |pyblisher=Hearst Communications |date=October 2001 |url=http://www.popularmechanics.com/automotive/new_cars/1269781.html?page=4 |accessdate=2007-10-31]

References


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