How do I check a trailer dealership’s floor plan and aged inventory before buying?

A trailer lot looks like an asset, but much of it may belong, in effect, to the lender. Floor plan financing means the dealer borrows against each unit it holds. Before you buy, you want to know exactly what is on the lot, what is owed against it, and which units are slow to move. The general mechanics are covered in our page on floor plan financing; this is the lot audit.

Match the lot to the statement

Ask for the latest floor plan statement and walk the lot with it. Check every unit by serial number, in both directions: each unit on the lot should be on the statement, and each unit on the statement should be on the lot. A unit that is missing, or one that was sold but not yet paid off, is a question to put to the seller in writing.

Look hard at the older units

Ask for an aged-inventory list showing how long each unit has been on the floor. Ask how the lender handles payments on older units and whether any are behind. Look at model-year carryover too, since last year’s models can be harder to move. Weathered stock, sun damage and lot dings all bear on the condition of each unit.

Separate what the dealer does not own

Demo units and consignment units may sit on the lot without belonging to the dealer. Ask for the paperwork on each. Then ask what happens to the floor plan and the manufacturer lines when ownership changes. The lender will set its own terms, and manufacturers often have their own approval step, so raise both early rather than at closing.

Questions for your advisors

• Ask your lawyer how liens on stock are searched and cleared.
• Ask your accountant how the inventory is recorded in the books.
• Ask the lender what it needs to see from you as the new owner.