For independent dealers, it can be tempting to try and do everything on your own. After all, you built your business from the ground up. But if you’re still relying on your own capital to fund your business growth, it’s time to consider a dealer line of credit, like the ones provided by an AFC dealer floorplan.
A dealer line of credit is a flexible financing option that can give car dealerships access to funds when needed. Instead of receiving a lump sum like a traditional loan, dealerships can draw from their credit line as necessary, up to a set limit.
An AFC floorplan can only be used for financing inventory — which helps dealers stock their lots while maintaining their cash flow. Leveraging floorplan funds to purchase vehicles frees up cash for your dealership so you can repurpose those funds for operational costs, vehicle repairs and more.
Here’s how floorplans generally work. Instead of purchasing a vehicle at auction for $10,000 using your own cash, you can use a floorplan and just pay the floorplan fees — leaving that cash in your account. There is no cash outflow for you until you sell the car or until your first curtailment.
Financing available through a dealer line of credit can help dealerships grow, stay competitive, and maintain steady cash flow. Let’s take a look at how a dealer line of credit can benefit your business.
How Does a Dealer Line of Credit Improve Cash Flow?
Cash flow can be a major challenge for dealerships, especially when it comes to purchasing inventory before it’s sold. An AFC dealer line of credit can ease these potential challenges by giving you quick access to the money needed for these purchases, so you don’t have to drain your cash.
Here’s how it helps:
- Optimize your cash flow: When you’re leveraging a line of credit, you have more cash on hand because you don’t need to pay for the vehicle the same day you make the purchase.
- Grow your business: If business is booming and you’re strapped for cash, a line of credit lets you keep stocking inventory without feeling the financial pressure.
- Flexible repayment: As you sell vehicles, you can pay back what you’ve borrowed, freeing up the credit line for future needs.
AFC’s dealer line of credit also comes with easy online management through the AFCDealer® platform, offering 24/7 access to account balances, payment options, and other financial insights. AFC may provide helpful services like title management and lien pay, reducing the time you spend on paperwork and administrative tasks, so you can focus on running your dealership.
How Can a Dealer Line of Credit Help Grow My Inventory?
Expanding your used car inventory often requires upfront capital, and many dealerships might not always have that available. With a dealer line of credit, you may be able to buy more vehicles without using up your cash.
Here’s how it can support growth:
- Instant access to funds: You can purchase vehicles at auctions or from other dealers as soon as they become available, ensuring you don’t miss out on opportunities.
- Maintain liquidity: Using credit instead of cash helps you keep money on hand for other business needs while still growing your inventory.
- Convenience: With an AFC line of credit, you have access to more than 1,300 auctions and online inventory sources across the US and Canada, making it easier to find and purchase the vehicles you need. AFC even can pay auction fees directly, cutting down on the hassle and out-of-pocket costs.
Descriptions of AFC floorplans are for illustrative purposes only. Terms of AFC floorplan financing are subject to a final written agreement acceptable with AFC. AFC does not guarantee any results for floorplan financing and examples are for illustrative purposes only. Dealers should consult their own advisors to make independent business decisions regarding floorplan financing.
“AFC” refers to Automotive Finance Corporation, Automotive Finance Canada Inc., and AFC Cal, LLC in their respective jurisdictions. All California transactions are through AFC Cal, LLC. California loans will be made pursuant to Department of Business Oversight California Finance Lenders License. Canadian transactions are through Automotive Finance Canada Inc.
