Financing and F&I
What is floor plan?
Also called: floorplan, flooring
A floor plan is a revolving credit line used to buy inventory, secured by the vehicles themselves, repaid as each car sells.
You pay interest per vehicle per day, plus per-unit fees, so the cost of a floorplan is really a cost of time. A car that turns in 30 days is cheap to carry; the same car at 120 days is not.
Federal tax law treats floor plan financing interest as its own category rather than ordinary business interest, which is worth raising with your accountant.
Lenders audit. Selling a floored car and not paying off the advance is being out of trust, and it is the fastest way to lose the line and the business with it.
Source: 26 U.S.C. 163 (floor plan financing interest)
Handle this automatically
Loturn tracks every cost against the VIN and shows live profit on every car, with real dealer accounting built in.
Related terms
Curtailment
A curtailment is a scheduled principal payment your floorplan lender requires on a vehicle that has not sold by a set age.
Days on lot
Days on lot counts how long a vehicle has been in your inventory, and it is the single best predictor of what it will finally sell for.
Out of trust
Out of trust means you sold a floorplanned vehicle and did not remit the payoff to the lender, spending money that was never yours.
General information for US dealers, not legal advice. Rules change and vary by state, so confirm specifics with your state agency or counsel.