Financing and F&I

What is out of trust?

Also called: sold out of trust, SOT

Out of trust means you sold a floorplanned vehicle and did not remit the payoff to the lender, spending money that was never yours.

It is usually a cash-flow problem before it is a dishonesty problem: the payoff funds this week's payroll, and the plan is to catch up on the next deal.

The customer generally keeps the car. Under the UCC a buyer in ordinary course takes free of a security interest created by the seller, so the lender's claim lands on you, not on them.

Source: UCC 9-320 (buyer in ordinary course)

Related terms

Floor plan

A floor plan is a revolving credit line used to buy inventory, secured by the vehicles themselves, repaid as each car sells.

Curtailment

A curtailment is a scheduled principal payment your floorplan lender requires on a vehicle that has not sold by a set age.

General information for US dealers, not legal advice. Rules change and vary by state, so confirm specifics with your state agency or counsel.