Definition
Floor plan
A floor plan is a revolving line of credit dealers use to finance their inventory, paying interest or fees for each vehicle for as long as it stays unsold.
Floor-plan financing is why time is the enemy of a used-car lot. The dealer borrows to stock the cars, and the meter runs on every unit until it sells. A car that sits for 90 days has quietly racked up carrying cost the whole time.
This is the money reason marketing matters. Moving an aging unit faster is not only a sale, it is the end of a daily expense. Every day cut from days on lot is margin protected.
Related terms
- Inventory agingInventory aging is how long a vehicle has sat unsold on a dealer's lot, usually measured in days since it was acquired or first listed.
- Days on lotDays on lot (DOL) is the number of days a specific vehicle has been in a dealer's inventory, from acquisition to sale.
- Aged unitAn aged unit is a vehicle that has been in inventory longer than a dealer's target, often 60 days or more, and needs attention to sell.
- Inventory turnInventory turn is how many times a dealer sells through and replaces its entire inventory over a period, a core measure of how healthy sales velocity is.
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