Auto dealerships run on one thing above all: inventory. And the engine behind that inventory is floor-plan financing – the short-term credit dealers use to purchase vehicles before they’re sold. When floor-plan terms shift, it doesn’t just affect dealers; it shapes pricing, margins, and even the stability of local auto markets.
In today’s tightening credit environment, floor-plan financing is undergoing its own reset. Access is changing. Pricing is rising. Structures are evolving. This post breaks down what’s happening in the world of floor plan financing, why it’s happening, and what it could mean for dealers and lenders heading into 2026.
Trends in Floor-Plan Availability: Key Data Points
- S. new-vehicle inventory reached 2.97M units and 88 days’ supply in Nov 2025 (up from 71 days a year earlier), meaning dealer lots are fuller, vehicles are selling more slowly, and dealers are relying more heavily on floor-plan financing – increasing the dealer’s interest cost per vehicle. (1)
- New-vehicle holding costs were $7.90/day in Q1 2025 and decreased by about $0.28 (≈ 3.5%) in Q3 2025, indicating a slight improvement, though vehicle holding costs remain elevated. (2)
- Net floor-plan expense per unit is climbing. In Q2 2025, dealers saw net floor-plan expense per vehicle rise by about 39% – an increase of roughly $139 per unit – as higher interest rates and slower turnover has pushed up the cost of carrying inventory. (3)
What’s Changing in Deal Structures?
Floor-plan structures today look different than they did even 18–24 months ago.
Advance Rates
- Lenders will usually finance 95–100% of the invoice cost on new cars. Hitting the 100% mark is now mostly reserved for strong, multi-store dealer groups with solid financials and good track records.
- For used inventory, lenders are more conservative. They typically advance 75–90% of the vehicle’s value. Independent used-car dealers, who are seen as riskier, often sit toward the lower end of that range.
- The longer a vehicle sits on the lot, the less comfortable lenders are financing it. Once a unit crosses 90 or 120 days, lenders often require the dealer to pay down a portion of the loan (curtailment) or face higher fees and penalties.
Sublimit & Concentration Limits
- To manage risk, lenders are putting stricter limits on how much of the total line can be used for used vehicles.
- Because future resale values are harder to predict, electric vehicle inventory often has its own small sublimit and lower advance rates than comparable units with internal combustion engines.
- High-value luxury vehicles are sometimes placed in a separate, tightly capped category so lenders can limit potential loss on any single high-ticket unit.
Personal Guarantees
- Personal guarantees, which had eased for stronger dealers in the low-rate years before 2020, are now being widely reintroduced.
- Owners of multi-store platforms are increasingly being asked for partial or full guarantees unless their balance sheets are exceptionally strong.
- Smaller and independent dealers are now expected to provide personal guarantees on nearly all new floor-plan facilities.
Covenants & Reporting
- Lenders are putting greater emphasis on minimum liquidity levels, tighter aging limits, and restrictions on adding new locations without prior consent.
- Lenders are watching cash flow closely, especially as interest costs rise.
Interest Rates & Fee Trends: Rates tell the story of the market right now
Interest Rates
- Most floor-plan lines are now priced at SOFR + 200–400 bps, depending on credit quality.
- Captive lenders sometimes offer subsidized or promotional rates on new models, but less frequently than in the past due to OEM margin pressures.
Fees – Dealers report increases in nearly all categories:
- Facility and audit fees have moved noticeably higher over the last two years, with many dealers reporting mid-teens percentage increases in the total dollars they pay for line commitments and audits as lenders pass through higher funding and risk-management costs.
- Non-usage fees are more common for dealers who under-utilize their floor-plan facility.
- Some lenders charge higher curtailment fees or aging surcharges for riskier units.
In short, the cost of carrying inventory has gone up – and it’s reshaping dealer profitability in real time.
Primary Floor-Plan Providers: Floor-plan financing is concentrated among three groups
1. Captive Finance Companies (OEM-affiliated)
Captives tend to offer the best terms on new inventory and remain the dominant source of floor-plan financing for franchise dealerships.
- GM Financial
- Ford Credit
- Toyota Financial Services
- Honda Financial Services
- Nissan Motor Acceptance
2. Big Banks with Dedicated Dealer Services Units
These banks serve large franchise groups and high-performing independents, offering broader credit products (mortgages, acquisitions, working capital).
- Ally Financial
- Bank of America Dealer Financial Services
- Wells Fargo Auto
- Capital One Auto Finance
3. Specialty Non-Bank Lenders
These lenders often take more risk – but in today’s environment, their pricing reflects it.
- Critical especially for used-car dealers:
- NextGear Capital (Cox Automotive)
- Westlake Flooring Services
- Floorplan Xpress
- Automotive Finance Corporation (AFC)
- CarBucks
Why the Floor-Plan Landscape Is Shifting – and What It Means for the Industry
The floor-plan landscape in 2025 is shifting for a few simple reasons. First, absolute borrowing costs remain relatively high compared with 2024, even as rates have started to ease, so lenders are still cautious in how they price and structure credit. Second, used-car values continue to move unevenly in 2025, which raises the risk of lower recoveries on repossessed vehicles. Third, lenders are paying closer attention to inventory aging, audit results, and repayment behavior, and even small signs of stress are leading to tighter controls.
For dealers, this means holding inventory is more expensive, so many are keeping tighter lots and pushing for faster turns. Independent and used-car-focused stores feel the most pressure, with lower advance rates, more frequent audits, and generally tighter access to credit. Strong, well-capitalized groups with good liquidity and disciplined aging, on the other hand, are still able to secure better terms.
For lenders and OEMs, it’s about balance: supporting dealers while managing credit risk and higher funding costs. As a result, 2025 has seen more selective underwriting and more targeted incentives, rather than broad across-the-board support.
Conclusion
Floor-plan financing in 2025 hasn’t disappeared – but it has fundamentally changed. Higher vehicle prices, fuller lots, and still-elevated carrying costs mean that every unit sitting on the ground ties up more capital than it did just a few years ago. Lenders are responding with tighter structures, closer monitoring, and more selective credit, creating a market where discipline matters more than ever.
For dealers, the winners will be those who keep inventory lean, aging clean, and cash flow predictable. For lenders and OEMs, the priority is stability: supporting dealer networks while managing real risk in an environment where values and rates remain in flux.
This isn’t a crisis – it’s a recalibration. But it’s a meaningful one. As the industry moves into 2026, floor-plan financing will increasingly reward operators who can turn cars quickly, manage capital efficiently, and navigate a more structured, data-driven lending environment.
Sources/Endnotes:
1) https://www.coxautoinc.com/insights-hub/oct-2025-new-vehicle-inventory/
2) https://www.vauto.com/industry-insights/q1-2025-insights/
3) https://optimuminfo.com/resources/blogs/dealer-financial-analysis-report-q2-2025
