Top Dealership Floor Plan Financing Companies

Choosing the right floor plan financing company is a critical decision for any dealership, whether you're selling cars, trucks, RVs, or powersports vehicles. Floor plan financing provides the capital necessary to stock your inventory, allowing you to showcase a wide selection of vehicles and attract more customers. But with so many dealership floor plan companies out there, how do you choose the one that best fits your needs? This article dives deep into the top players in the industry, highlighting their strengths, weaknesses, and what makes them stand out.

Understanding Floor Plan Financing

Before we jump into the list, let's quickly recap what floor plan financing is all about. Essentially, it's a short-term loan that allows dealerships to purchase inventory. The lender pays the manufacturer or supplier for the vehicles, and the dealership repays the loan as the vehicles are sold. This type of financing is crucial for maintaining a healthy inventory and keeping your showroom floor looking attractive to potential buyers. Without it, most dealerships would struggle to stay afloat.

Floor plan financing is a specialized type of lending that caters specifically to the needs of dealerships. Unlike traditional loans, which might be used for long-term investments or operational expenses, floor plan financing is directly tied to the inventory on the showroom floor. The amount of credit available is typically determined by the value of the inventory, and the terms of the loan are designed to align with the expected sales cycle of the vehicles. This means that as vehicles are sold, the dealership repays the portion of the loan associated with that vehicle, freeing up credit to finance new inventory.

One of the key benefits of dealership floor plan companies is their expertise in the automotive industry. They understand the unique challenges and opportunities that dealerships face, such as seasonal fluctuations in demand, the impact of manufacturer incentives, and the importance of maintaining a diverse inventory. This industry-specific knowledge allows them to offer tailored financing solutions that are more flexible and responsive than those available from general lenders. For example, they might offer promotional rates during peak sales seasons or adjust repayment schedules to accommodate slower-moving inventory. This level of customization can be invaluable for dealerships looking to optimize their cash flow and maximize profitability.

Moreover, floor plan financing often comes with additional services that can help dealerships manage their inventory more effectively. These services might include online platforms for tracking inventory levels, tools for analyzing sales trends, and support for managing the relationship with manufacturers. By providing these resources, dealership floor plan companies can help dealerships make more informed decisions about what vehicles to stock, how to price them competitively, and when to offer incentives to move inventory. This comprehensive approach can lead to improved sales performance, reduced carrying costs, and a stronger overall financial position.

When evaluating floor plan financing options, it's essential to consider not only the interest rates and fees but also the level of support and expertise that the lender provides. A good floor plan financing partner will work closely with the dealership to understand its specific needs and develop a customized financing plan that aligns with its business goals. They will also be responsive to changes in the market and willing to adjust the financing terms as needed to help the dealership succeed. This collaborative approach can be a significant advantage, especially for smaller dealerships that may not have the resources to manage their inventory financing in-house.

Factors to Consider When Choosing a Floor Plan Company

Before we dive into specific companies, let's outline the key factors you should consider when making your choice. This will help you evaluate each option and determine which one aligns best with your dealership's unique needs.

• Interest Rates and Fees: This is the most obvious factor. Look for competitive rates and be sure to understand all associated fees, such as origination fees, monthly minimums, and audit fees.
• Credit Line: Ensure the company can provide a credit line that's sufficient for your inventory needs. Consider your current inventory levels and future growth plans.
• Repayment Terms: Understand the repayment terms, including the grace period, curtailment schedule, and any penalties for early or late payments.
• Inventory Management Tools: Does the company offer tools to help you manage your inventory effectively? This can include online portals, reporting features, and mobile apps.
• Customer Service: Look for a company with a reputation for excellent customer service. You want a partner that's responsive, helpful, and easy to work with.
• Industry Expertise: Choose a company that understands the nuances of your specific industry, whether it's automotive, RV, or powersports.
• Financial Stability: Ensure the company is financially stable and has a proven track record of success.

These factors are crucial in making an informed decision. Choosing the right floor plan company can significantly impact your dealership's profitability and overall success. By carefully evaluating each of these aspects, you can find a partner that aligns with your business goals and helps you achieve long-term growth.

When assessing interest rates and fees, it's important to look beyond the headline numbers and consider the total cost of financing. Some dealership floor plan companies may advertise low interest rates but then charge high fees for other services, such as inventory audits or online platform access. To get a clear picture of the true cost, ask for a detailed breakdown of all fees and charges, and compare the total cost across different lenders. You should also inquire about any potential discounts or incentives that may be available, such as volume discounts or early payment rewards.

Credit line availability is another critical consideration. You need to ensure that the floor plan financing company can provide a credit line that is sufficient to meet your current and future inventory needs. Consider not only the number of vehicles you plan to stock but also the average cost of those vehicles and any seasonal fluctuations in demand. It's better to have a slightly larger credit line than you think you need, as this will give you the flexibility to respond to unexpected opportunities or challenges. However, be mindful of any fees associated with unused credit, as these can add to your overall financing costs.

Repayment terms can also have a significant impact on your dealership's cash flow. Look for a floor plan financing company that offers flexible repayment options that align with your sales cycle. A longer grace period can give you more time to sell vehicles before you have to start making payments, while a shorter curtailment schedule can help you pay down the loan faster and reduce your overall interest costs. Be sure to understand the penalties for early or late payments, as these can be substantial and can quickly erode your profitability.

Effective inventory management is essential for maximizing the benefits of floor plan financing. Look for dealership floor plan companies that offer robust inventory management tools, such as online portals, reporting features, and mobile apps. These tools can help you track your inventory levels in real-time, monitor sales trends, and identify slow-moving vehicles. By using this information, you can make more informed decisions about what vehicles to stock, how to price them competitively, and when to offer incentives to move inventory. This can lead to improved sales performance, reduced carrying costs, and a stronger overall financial position.

Finally, don't underestimate the importance of customer service and industry expertise. Choose a floor plan financing company that is responsive, helpful, and easy to work with. You want a partner that understands the unique challenges and opportunities that dealerships face and is committed to helping you succeed. Look for a company with a proven track record of success and a reputation for providing excellent customer service. By working with a reputable and experienced floor plan financing company, you can gain a competitive advantage and achieve your long-term business goals.

Top Dealership Floor Plan Companies

Okay, let's get to the good stuff! Here are some of the top dealership floor plan companies in the market today, along with a brief overview of their strengths:

1. NextGear Capital:

   NextGear Capital is one of the largest and most well-known dealership floor plan companies in the industry. They offer a wide range of financing solutions for independent and franchise dealerships, covering everything from cars and trucks to RVs and powersports vehicles. NextGear Capital stands out due to its advanced technology and inventory management tools. Their online platform, Account Portal, provides real-time access to inventory data, allowing dealerships to track sales, manage their credit line, and make informed decisions about their inventory. They also offer a mobile app for on-the-go access, making it easy for dealerships to stay connected and manage their financing from anywhere. Furthermore, NextGear Capital's parent company, Cox Automotive, provides access to a wide range of automotive solutions, including vehicle valuation, digital marketing, and inventory management tools, creating a comprehensive ecosystem for dealerships. However, some dealerships may find their fees to be slightly higher compared to other providers.

   NextGear Capital has established itself as a leader in the dealership floor plan companies market by consistently innovating and adapting to the evolving needs of dealerships. They have invested heavily in technology to provide dealerships with the tools they need to manage their inventory more efficiently and effectively. Their Account Portal is a user-friendly platform that provides real-time access to inventory data, allowing dealerships to track sales, monitor credit lines, and make informed decisions about their inventory. The mobile app provides added convenience, enabling dealerships to stay connected and manage their financing from anywhere.

   In addition to its technology offerings, NextGear Capital also provides a high level of customer support. They have a team of experienced professionals who understand the unique challenges and opportunities that dealerships face. They work closely with dealerships to develop customized financing solutions that meet their specific needs and provide ongoing support to help them succeed. This level of personalized service can be invaluable, especially for smaller dealerships that may not have the resources to manage their inventory financing in-house.

   Moreover, NextGear Capital's affiliation with Cox Automotive gives them a significant advantage over other dealership floor plan companies. Cox Automotive is a leading provider of automotive solutions, including vehicle valuation, digital marketing, and inventory management tools. By partnering with Cox Automotive, NextGear Capital can offer dealerships access to a wide range of resources that can help them improve their operations and increase their profitability. This comprehensive ecosystem of services can be a major draw for dealerships looking for a one-stop shop for all their automotive needs.

   However, it's important to note that NextGear Capital's fees may be slightly higher compared to other dealership floor plan companies. Dealerships should carefully evaluate their financing needs and compare the total cost of financing across different providers before making a decision. While NextGear Capital's technology and customer service offerings may justify the higher fees for some dealerships, others may find that a more cost-effective solution is a better fit for their business.

2. AFC (Automotive Finance Corporation):

   AFC, a subsidiary of KAR Auction Services, focuses on providing floor plan financing to independent dealerships. They are known for their competitive rates and flexible terms, making them a popular choice for smaller dealerships. AFC's primary strength lies in its streamlined application process and quick funding times. They understand that dealerships need access to capital quickly to purchase inventory, and they have designed their processes to minimize delays. AFC also offers a range of inventory management tools to help dealerships track their inventory and manage their credit line. They provide online access to account information, allowing dealerships to monitor their balances, track payments, and view inventory reports. AFC's strong relationships with auction houses also provide dealerships with access to a wide range of vehicles at competitive prices. However, their credit lines may be smaller compared to larger competitors.

   AFC (Automotive Finance Corporation) has carved out a niche in the dealership floor plan companies market by focusing on the needs of independent dealerships. They understand that these dealerships often face unique challenges, such as limited access to capital and the need to manage inventory efficiently. AFC has designed its financing solutions and services to address these challenges and provide independent dealerships with the support they need to succeed.

   One of AFC's key strengths is its competitive rates and flexible terms. They offer a range of financing options to meet the specific needs of independent dealerships, and they are willing to work with dealerships that may have less-than-perfect credit. This flexibility can be invaluable for dealerships that are just starting out or that are looking to expand their operations.

   Another advantage of AFC is its streamlined application process and quick funding times. They understand that dealerships need access to capital quickly to purchase inventory, and they have designed their processes to minimize delays. This can be a significant advantage for dealerships that need to move quickly to take advantage of opportunities in the market.

   AFC also offers a range of inventory management tools to help dealerships track their inventory and manage their credit line. These tools provide online access to account information, allowing dealerships to monitor their balances, track payments, and view inventory reports. This information can help dealerships make more informed decisions about what vehicles to stock, how to price them competitively, and when to offer incentives to move inventory.

   Moreover, AFC's strong relationships with auction houses provide dealerships with access to a wide range of vehicles at competitive prices. This can be a significant advantage for dealerships that are looking to expand their inventory or that are seeking to purchase vehicles at wholesale prices.

   However, it's important to note that AFC's credit lines may be smaller compared to larger dealership floor plan companies. This may not be an issue for smaller dealerships, but it could be a limiting factor for dealerships that are looking to significantly expand their operations.

3. DLL (De Lage Landen):

   DLL, a global financial solutions provider, offers floor plan financing for a variety of industries, including the automotive and equipment sectors. They are known for their comprehensive solutions and global reach. DLL differentiates itself through its focus on building long-term relationships with its customers. They take the time to understand the unique needs of each dealership and develop customized financing solutions that align with their business goals. DLL also provides a range of value-added services, such as risk management and insurance solutions, to help dealerships protect their assets and manage their risks. Their global reach can be particularly beneficial for dealerships that operate in multiple countries or that source vehicles from international markets. However, their application process may be more complex compared to other providers.

   DLL (De Lage Landen) stands out among dealership floor plan companies due to its global presence and comprehensive financial solutions. As a global financial solutions provider, DLL serves a wide range of industries, including the automotive and equipment sectors. This broad experience allows them to bring a unique perspective to the floor plan financing market and offer innovative solutions that meet the evolving needs of dealerships.

   One of DLL's key differentiators is its focus on building long-term relationships with its customers. They believe that by taking the time to understand the unique needs of each dealership, they can develop customized financing solutions that align with their business goals. This personalized approach can be invaluable for dealerships that are looking for a financing partner that is truly invested in their success.

   In addition to its customized financing solutions, DLL also provides a range of value-added services, such as risk management and insurance solutions. These services can help dealerships protect their assets and manage their risks, providing them with peace of mind and allowing them to focus on growing their business.

   DLL's global reach can be particularly beneficial for dealerships that operate in multiple countries or that source vehicles from international markets. They have a deep understanding of the complexities of international trade and can provide dealerships with the financial solutions they need to navigate these challenges.

   However, it's important to note that DLL's application process may be more complex compared to other dealership floor plan companies. This is due to their focus on developing customized financing solutions and their need to comply with international regulations. Dealerships should be prepared to provide detailed financial information and work closely with DLL's team to complete the application process.

Conclusion

Choosing the right dealership floor plan company is a crucial decision that can significantly impact your dealership's success. By carefully considering the factors outlined in this article and evaluating the top companies in the market, you can find a partner that aligns with your needs and helps you achieve your business goals. Remember to prioritize competitive rates, flexible terms, robust inventory management tools, and excellent customer service. Good luck!

Ultimately, the best dealership floor plan companies for you will depend on your specific needs and circumstances. Take the time to research your options, compare different providers, and choose a partner that you trust and that you believe will help you achieve your business goals. With the right financing in place, you can stock your showroom with the vehicles your customers want and drive your dealership to success.