What Is Floor Plan Interest

Simply it is a way for an auto dealer to use a lender s funds to finance the cars and until each of them is sold the lender holds title to the cars.

What is floor plan interest.

What you don t realize is that like most new car dealers a floor plan was used to finance the cars. Interest rate floors are utilized in derivative contracts and loan. Floor plan lending is a form of inventory financing for a dealer of consumer or commercial goods in which each loan advance is made against a specific piece of collateral. Business interest in excess of the limitation can be carried forward indefinitely.

An interest rate floor is an agreed upon rate in the lower range of rates associated with a floating rate loan product. Specialty lenders traditional banks and finance arms of manufacturers provide the. Floor planning is a form of retailer financing for large ticket items displayed on showroom floors or lots. With a floor plan the initial investment needed to buy a particular unit is a fraction of the vehicle s actual purchase price.

Account 076 interest floorplan is es tablished to record the interest charges on vehicles in inventory financed under the dealership s floorplan line of credit.