ACV facts & figures
For independent car dealers, inventory is the engine that drives the business. The ability to buy the right vehicles at the right time directly impacts sales, cash flow, and long term growth. But paying cash for inventory can limit buying power and create unnecessary pressure on working capital. That is why many independent dealers rely on inventory financing to operate more efficiently and stay competitive.
Why Inventory Financing Matters
Independent dealers face constant tradeoffs between holding cash and buying inventory. Paying cash for vehicles restricts how many units you can carry and reduces flexibility when opportunities arise at auction or through off market purchases.
Inventory financing helps solve this challenge by allowing dealers to spread the cost of vehicles over time. Instead of tying up cash in every purchase, dealers can use financing to keep capital available for reconditioning, marketing, payroll, and day to day operations.
Dealer focused financing is designed to support how inventory is actually bought and sold, not treated like a traditional business loan.
How Floor Plan Financing Works
Floor plan financing is one of the most common tools independent dealers use to fund inventory. At a high level, it functions as a revolving line of credit dedicated to purchasing vehicles.
A floor plan provider extends a credit line that can be used to buy inventory from auctions and other approved sources. Rather than paying the full purchase price upfront, the dealer uses the line of credit to acquire the vehicle and repays it once the car sells.
While the vehicle remains in inventory, a small holding cost or interest is applied. When the vehicle sells, the financed amount and any associated fees are paid off, and the dealer retains the remaining profit.
Why Independent Car Dealers Use Floor Plans
Floor plan financing gives dealers more control over their inventory strategy. With less cash tied up in each purchase, dealers can buy more vehicles, diversify inventory, and act quickly when the right units become available.
Another advantage is liquidity. Maintaining cash on hand allows dealers to handle reconditioning costs, invest in marketing, and manage seasonal fluctuations without slowing down inventory acquisition.
In most cases, the inventory itself serves as collateral. This reduces the need to secure financing with personal assets, which is often required with traditional bank loans.
Floor Plans Versus Traditional Bank Financing
Some dealers choose to work with banks or credit unions for inventory funding. While this approach can work, it often comes with stricter requirements such as personal guarantees and less flexibility around inventory purchases.
Bank financing can also require dealers to manage more administrative tasks on their own. This may include coordinating payments at auction, tracking balances, and handling title processing. These responsibilities take time and attention away from running the dealership.
Floor plan providers like ACV Capital are built specifically to support dealership operations. Financing, payment to sellers, dedicated account management and title handling are often integrated into the process, helping dealers save time and reduce friction when acquiring inventory.
Getting Started With Inventory Financing
Applying for floor plan financing is typically straightforward. Many providers including ACV Capital offer online applications and evaluate factors such as dealership history, financial performance, and inventory strategy. Once approved, dealers can access their credit line quickly and begin purchasing inventory.
It is important to understand the full structure of any financing agreement. This includes interest rates, fees, curtailments, and repayment timelines. The best financing solution aligns with how quickly your inventory turns and how your dealership operates.
A Smarter Approach to Inventory Financing with ACV Capital
As you evaluate financing options for your dealership, the right partner can make a meaningful difference. ACV Capital works alongside independent dealers to deliver flexible inventory financing that supports how dealers buy, sell, and manage vehicles every day. With transparent pricing and no hidden fees, you know your costs upfront. Flexible terms mean you only pay for the days you need, and our online ACV Capital portal makes it easy to manage your account at any time. When questions come up, a dedicated account manager is available to provide guidance and support. Learn more about how ACV Capital can help support your inventory strategy.
