What Is Floor Plan Financing Interest

Floor plan financing interest expense.

What is floor plan financing interest. But it came at a cost. So how does floor plan financing work. The money borrowed from the bank collects interest and one has the choice to either make a minimum payment or pay off the balance in full when the bill is due. Much like a credit card a floor plan financing company extends a line of credit to a car dealer.

Dealerships that take the floor plan financing interest exclusion in computing their limit can t claim 100 bonus depreciation for their fixed asset additions. Floor plan lending is a form of inventory financing for a dealer of consumer or commercial goods in which each loan advance is made against a specific piece of collateral. Floor planning is a form of retailer financing for large ticket items displayed on showroom floors or lots. What you don t realize is that like most new car dealers a floor plan was used to finance the cars.

Floor plan financing interest expense remained fully deductible under tax reform. Simply it is a way for an auto dealer to use a lender s funds to finance the cars and until each of them is sold the lender holds title to the cars.