Who Is Paying for All Those Vehicles Sitting on the Lot of an Auto Dealership?

While automobile dealerships have done quite well over the past few decades, tougher times have certainly set in over the last few years. The widespread use of the Internet to search for available cars, ever-demanding consumers, low interest rates on car loans and increasing competition have taken the automobile dealership industry to a new level.

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So how can such dealerships survive in this market? How do they separate themselves from their competition? They do so by embracing two items: the use of technology and access to a healthy inventory จำนำรถยนต์.

Technology allows the would-be consumer to do a lot of research before they buy. This will allow them to determine their needs, their budget, specific offerings of an individual automobile and compare prices at dealerships across the country. The Internet, Facebook, comparison shopper websites and the like have helped the consumer to embrace technology and shop “beyond” their local geographic area.

When consumers do come looking for vehicles, it is key for a dealership to carry a healthy amount of inventory. Obtaining this inventory, tracking it, monitoring it and finding a funding source to cover holding costs can be a massive undertaking. Again, technology and various software tools make such endeavors more manageable. Many dealerships have a plethora of information to keep up with and gross amounts of data to collect.

While all of this may sound fairly complex in nature, it truly all boils down to one question: how in the world can a dealership afford to operate with such high carrying costs for the inventory they have?

The answer to that question is a concept called floor plan lending. This type of lending relationship, between a lending institution and dealership, provides a line of credit and/or loan to the dealership to further enhance their inventory. The loan is made against the inventory item itself, and comes with a set of terms and conditions that typically states the loan will be repaid when the collateral (vehicle) sells. Interest is paid on the loan and the relationship is continued as long as both parties are happy.

There is a lot more to this type of relationship than just money changing hands. With the amount of data needed on each vehicle, details of each loan agreement, payment dates and other tracking data, there is a monumental need for organization and clarity between both parties. At the end of the day, the process comes full circle and technology is seen as the vital connection that helps to bind both parties together.

By utilizing software to manage the relationship, floor plan lenders can maximize their investment in the dealership while helping to further the business of the dealership itself. The lender is simply the catalyst that enables the entire process to thrive and survive. So while at the end of the day the floor plan lender pays for the inventory on a short term basis, it’s the actual dealership (and ultimately the consumer that purchases the vehicle) that pays for the cars on the lot.

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