How do I show a lender how my used car lot’s floor plan is managed?

Floor plan financing is closely watched, and a lender wants to see that you manage it with care. Begin with a live schedule of every financed vehicle: stock number, acquisition date, amount owed, current days on the lot and planned action. Review it on a regular schedule and be ready to show the lender that you do. A lot that knows its oldest units is a lot that has control.

Explain the controls. Who pays off a unit when it sells, and how quickly? What happens to vehicles that sit too long: price reductions, wholesale or transfer? Describe how you reconcile the schedule to the lender’s records and to your physical inventory. If the lender audits your lot, show how you handle it and what the last results were.

Tie the floor plan to your wider picture. Include it in your cash flow projections, with sales pace, margins and the cash needed to replace units. A short written policy on buying, pricing and aging gives the lender a document they can rely on. If you are planning an acquisition, show how the floor plan will be managed during the changeover. Your accountant can help you present it.

Key takeaways

• Keep a live schedule of every financed unit and its days on the lot.
• Describe how sold units are paid off and aged units are handled.
• Put the floor plan inside your cash flow projections.