How Does Floor Plan Financing Work For Car Dealerships

Floor plan financing is a key element of the auto industry in both Canada and the United States . Exactly what is floor plan financing and how does it work?

This type of financing is in effect a short term inventory financing for both new and used car dealerships . Traditionally the floor plan industry was geared towards what we know as franchise dealers, i.e those dealers representing product for the likes of GM, CHRYSLER, FORD, etc .

The financing allows the dealers to carry sufficient inventory to satisfy customer needs and demands re model types, accessories, options, etc . It is an extremely large market in what is of course a multi billion dollar industry .

When floor planning financing works properly it is effective, has a reasonable cost attached to the financing, and is totally transparent to the consumer . As consumers when we drive past auto dealerships, either new or used, we don’t care how the inventory got there, we just know its there for us to examine and purchase .

Floor plan financing is executed on both a small and large basis . It is not unusual for finance firms to use more esoteric finance vehicles such as asset backed commercial paper, Special Investment Vehicles ( commonly called SIV’s ) etc. to finance the billions of dollars of inventory that the industry needs to move product through .

Naturally, whether we are talking about the largest GM dealer in town, or a small used car dealership with multi lines of vehicles there has to be a finance program that can grow and backstop that inventory .

In the Canadian marketplace as an example, with which this writer is more familiar , the independent dealers have as much need as franchise dealers for this valuable type of financing .

We have all read recently that many of the tier one floor plan firms such as GMAC and CHRYSLER CREDIT have withdrawn substantially from the market . This has allowed a number of private firms to enter the market and capitalize on the withdrawal of the ‘ big boys ‘ . Additionally, as the banks perceived the auto market as significantly more risky in the current 2008-2010 economic turmoil they also have scaled bank in their previous focus on floor plan financing for car dealerships .

Finance firms that execute well on floor plan financing initiatives are those that of course properly funded ; they also know how to collateralize the inventory through proper legal documentation and registration. The average term for a car being on the auto lot tends to be within 30-90 days . The floor plan financier registers liens on the vehicle, and when the vehicle is sold that lien is removed . The finance firm of course profits from the ability to charge the dealership interest over that 30-90 day period . Naturally this process repeats itself continuously . Lenders must have reasonable confidence in the financial viability of the dealer, more experienced and financially solvent dealers can naturally command larger floor planning facilities . Dealers also are subject to rigorous audits of the inventory . The lender wants to know the car is still there and hasn’t been sold and not paid for of course! Therefore VIN ( vehicle identification numbers ) are checked regularly by finance company personnel , insurance is validated, and random inspections are common

Overall the auto floor plan facility is a key aspect of the automotive market , and is a significant benefit to both new an car dealers alike .

Things To Consider About Car Loans Before You Seal The Deal

When you have had enough of your old car and finding it very difficult to keep up with the high maintenance costs, it is time to get a new car. If this is what you have often contemplated, but always stop at seeing the money involved, auto car loans can be an option for you.
There are several companies that offer you with such loans. Choosing a good company based on your budget should not be a tough task. There are types of loan that you can get approved for despite a low credit score. Doing a search online for poor credit auto loan lenders should reveal several different offers.

Check Out Your Options

When getting a car loan with a company, make sure you are aware of what you are getting and what the involved conditions are. Never get into a contract for an auto car loan without understanding the terms and conditions in details. This can result in highly undesirable situations later on. Try to clarify each and every point you see and have no doubts left untouched.

State Your Requirements

It is important to understand that the finance companies are always looking to sign up new customers with them as that is what earns them their revenues. Don’t settle straightaway for the offer they place in front of you.
Try to bring down the costs and the money according to your needs as much as possible. It might sound unbelievable but finance companies often bend their rules to suit the requirements of the customers in relation to the auto car loans. Try to take full advantage of this point and don´t settle for the first offer you get.

Type Of Loan

The rates, terms and the conditions vary according to the type of the auto loan you apply for as well. You can see a long payback period with quite low down payments and interest rates if you opt for the secured loans instead of the unsecured loans.
However secured loans require you to fulfill a number of conditions like providing collateral, your credit report, paperwork, etc. Unsecured loans are quicker and simpler to apply for, but include for higher interest rates and shorter payback terms.
Decide which seems to be the best option among the auto car loans for you that fits your budget depending on the above mentioned points. A new car is not an impossible item to get with the options a car loan can provide you with.

Use Your Judgments

Just use your good judgment and don´t get yourself involved in a bad deal without checking out all the different options. There are many places online where you can get a car loan quote where you can compare the different offers and find out how much money you can borrow.

On these sites you can usually also get quotes for cheaper insurance and offers on mortgage loans. I hope this information have been helpful and that you can gained a better understanding on how loans work.

Auto Loans For Students: Helping Students Own Vehicle

In student life often usage of public transportation hurts you. You get tired of having to walk to class in wet, cold weather. Maybe you need a car to get to and from a new job that you just started. You can apply for an Auto loans for students, even if you have no credit or bad credit!

The most striking feature of the auto loans for students is that they are specially made for the students keeping in mind their comfort and discomfort. There are very less percentage of students who has good credit history. Hence, these loans are meant for students with no or bad credit history as well as good credit history.

The amount for the loan should be applied carefully. That is, you must not take excess fund just spend on other less important things. The amount is dependent on the choice of the car that you want to buy.

Repayment period is usually of 5 years but it can be stretched up to 7years. The student car loans are of secured type. Your car is kept as collateral which will be possessed by the company for reselling. You should always try to make your down payment as high as possible for you. This will leave you with smaller amount to be paid as monthly installments. Down payment of 20% is advisable.

The auto loans for students are best availed through website. There are countless lenders websites offering you such loans. Just a small formality is required. You will have to submit online application. However, you need to keep in mind to tally all the terms of loans offered by various lenders before committing.