| Well... the short answer is in a variety of different | | | | dealer will get a credit for the difference in days. |
| ways. | | | | For example if the dealer is on a 90 day floorplan |
| Now don't take this wrong and think that ah ha... | | | | and they sell a car within 10 days of floorplanning |
| another way to scam and separate the most | | | | it, then the dealer gets 80 days of credit... this |
| hard earned money they can from their | | | | credit is as good as cash because at the end of |
| customers. | | | | each of the billing cycles, the dealer will get the |
| Not in this case anyway. | | | | credit days back in the form of a check. |
| All businesses must have a variety of different | | | | Starting to see the revenue opportunity here? |
| revenue sources if they are to prosper and pay | | | | You can probably see that it behooves the dealer |
| their employees. | | | | to not only tightly manage the inventory, but to |
| Let's take a look at an aspect of a car dealer's | | | | turn it over (sell it) quickly. The more efficiently a |
| business known in the industry as floorplan. | | | | dealer can do this, the bigger the check they get |
| Floor plan is not something that is generally known | | | | back each month that will add nicely to their |
| to the public simply because it doesn't directly | | | | profitability. |
| affect the cost of the car but it does affect the | | | | I mean do the math here. Just to make the math |
| profitability of the dealership. | | | | very easy... let's say a dealer pays $5 per day in |
| A lot of people wonder how in world can a car | | | | interest charges that a car is floorplanned. 50 |
| dealership make any profit when they are claiming | | | | days of credit back to the dealer would be $250. |
| that they are selling at or below their cost? | | | | Since a dealer can carry anywhere from a couple |
| First of all a dealer's actual invoice or dead cost is | | | | hundred cars (larger dealers carrying over a |
| a rather nebulous figure to arrive at... but let's | | | | thousand cars) in their floorplanned inventory... you |
| stick with floor plan. | | | | can see that if they effectively manage and turn |
| By in large, the majority of dealers to participate | | | | their inventory, they can get a nice check kicked |
| in some type of floorplan with their bank. This | | | | back to them each and every month. |
| simply means they carry a mortgage or credit | | | | Cars that sit on the lot beyond the floorplan grace |
| account against their inventory, meaning they | | | | period begin costing the dealer money in terms of |
| borrow money to provide the inventory that sits | | | | interest payments to the bank. This is why |
| on their car lot... and this is a quite normal aspect | | | | dealers like to move those cars that are on the |
| of the cost of doing business. It's simply a rotating | | | | brink of costing them more money. |
| effect where one car is paid off when it's sold | | | | So there you go... that's the way that car dealers |
| and the next car comes off the transport truck | | | | who participate in floorplanning with their financial |
| and is added to the dealer's floorplan. | | | | institute can sell you cars below what the cost on |
| Depending upon the agreement the dealer or | | | | the invoice actually is. |
| ownership group has with their bank, the bank will | | | | You are about to learn everything that car |
| floorplan the inventory for a period of time for | | | | dealers don't want you to know. In just a few |
| the dealer at no cost. Typically there is a period | | | | minutes with my complete car buying guide at |
| of between 30 and days of no interest charges | | | | you'll be ready to save $1000 or more the next |
| against the dealer's inventory once it hits the | | | | time you buy a car. Discover how to buy a car |
| ground. | | | | and get the best car deal possible with my |
| Now... if the car is sold during the free period, the | | | | complete car buying guide. |