A floor plan looks free on the day you buy. The auction releases the car, the lender pays, and you drive away with a unit you did not have the cash for. The bill arrives per day, per car, and it grows with the age of the car, which is the one thing a dealer who is holding out for a better price never wants to hear.
This is how the cost is built, what it adds up to on one ordinary car at 30, 60 and 90 days, and the test for whether flooring beats cash on your lot. The lender’s own numbers are the ones that matter; the example rate here is an assumption, labelled as such, and the arithmetic is what carries over.
How the money moves
A floor plan is a revolving line of credit that can only be spent on inventory. When you buy a car, the lender advances the purchase price, commonly up to 100% of it, and takes the title as collateral. From that day the car carries interest on the advance. As the car ages, the lender requires curtailment payments: scheduled partial repayments of the principal, usually a percentage of the original advance, at set intervals. When the car sells, you repay the balance plus whatever is owed, the lender releases the title, and the credit is available again for the next car. Terms commonly run 90 to 180 days.
Lenders describe it as a credit card for inventory, which is fair as far as it goes. The difference is that a credit card does not ask for part of the principal back on day 30 and again on day 60 whether or not you have been paid.
The lines on one car
Four things cost money, and only the first is usually quoted.
Interest, on the outstanding balance, for every day the car is floored. Rates are set per dealer by credit and volume; the example below uses 12% a year, which is an assumption to make the arithmetic concrete, not a published rate. Your lender’s figure replaces it.
Curtailments. Not a cost in themselves, since they reduce what you owe, but they are cash out of the business on a schedule set by the car’s age rather than by its sale. A dealer with eight floored cars and two slow months discovers that curtailments arrive on cars that have not produced a dollar yet. Missing one carries a penalty; some lenders let you defer one for a flat fee, $95 per deferment in one published example.
Per-unit fees. Lenders commonly list document or title handling fees per floored car, audit fees, and early payoff charges, and the structures vary widely. A fee that is small per car is a few hundred dollars a month across a lot.
The end of the term. If the car has not sold, the balance is due. Paying it from cash, wholesaling the car to clear it or re-flooring it are the options, and none of them is good, because by then the car has already cost the full stack of interest and fees.
One car at 30, 60 and 90 days
Take a $7,000 advance on a car bought at auction. Assume 12% a year in interest, a $75 per-unit fee at flooring, and a curtailment of 10% of the advance due at day 30 and again at day 60. Interest is charged on the balance after each curtailment. Your lender’s schedule will differ; this is the shape.
| Days | Interest and fee | Principal paid down | Per day |
|---|---|---|---|
| 30 | $144 | $700 | $4.80 |
| 60 | $206 | $1,400 | $3.43 |
| 90 | $261 | $1,400 | $2.90 |
Read the right-hand column carefully, because it looks like the cost per day falls with age, and in one narrow sense it does: the flat fee is spread over more days. In every sense that matters it is the wrong way round. The car at 90 days has cost $261 of interest and fees against a gross that has probably fallen by more than that, has pulled $1,400 of cash out of the business on a schedule that ignored sales, and is thirty days from a balance due in full. The car at 30 days cost $144 and the capital is already back in the next unit.
Cost per day of the floor plan is not the number to minimise. Profit per day of capital is. Days on the lot has the argument, and it is the same whether the capital is yours or the lender’s: a $1,400 profit in 24 days beats a $2,200 profit in 96.
When the floor plan beats cash
It beats cash when the credit lets you hold cars you could not otherwise afford and they turn fast. A lot with $20,000 of cash and a $60,000 floor plan can stock twelve cars instead of three, and if they sell in 35 days the interest on each is a small line against a gross the lot would not otherwise have made. Cox Automotive had cars under $15,000 at 29 days’ supply in August 2026, so the cheap end of the market is turning at that speed for a lot that buys right.
It loses to cash when cars sit. At 90 days the floor plan has cost more than a cash buyer’s opportunity cost on the same car, the curtailments have strained the cash the lot needed for the next auction, and the lender’s view of the account has worsened. Lenders say plainly that late curtailments, slow payoffs and bad audits are what stop a line being increased; they underwrite the account continuously.
The test is your own average days to sell. Under 45, which lenders themselves cite as the industry best practice for turning inventory, a floor plan usually pays. Over 90, the floor plan is funding cars that should have been priced down or wholesaled at day 30, and the aged inventory playbook is the fix.
Putting it on the car
Floor plan cost belongs on the unit that was floored, for the days it was floored, not in the lot’s overheads. It is the clearest example of a cost that is driven by the car’s own behaviour, and burying it in a monthly total hides which cars are expensive. Net profit per car treats it as a car-specific line between gross and overhead, and that is where it goes in the books too.
In practice: the day the car is floored, record the advance, the rate and the fee on the car. Every curtailment is recorded against the car on the day it is paid. When the car sells, the interest to date is the car’s cost, and the real profit on the sale is computed with it in. A car that shows a $1,600 gross and a $1,340 real profit after flooring is a car that was held too long, and the record says so without anyone arguing.
The habit that keeps a floor plan cheap
A floor plan is cheap for the dealer who sells in 30 days and expensive for the one who sells in 90, on identical cars at identical rates. Every mechanism in the contract, the daily interest, the curtailment schedule, the term, is designed to charge for age. The habit that beats it is a weekly look at every floored car by days: what it has cost so far, when the next curtailment lands, and whether the price should move today. The five numbers to check every Monday puts that look at the top of the list.
The Deelary app holds every cost on the car it belongs to, including the floor plan lines, with the days held on every unit on the screen, so the Monday look takes a minute. The free car flipping spreadsheet does it for a few cars with a column for the flooring cost. Either way, the car carries its own bill, and the bill is read by the day.
Frequently asked questions
How does floor plan financing work for a used car dealer?
A floor plan is a revolving line of credit used only to buy inventory. The lender advances the purchase price, often up to 100% of it, and holds the title. Interest accrues on each car for every day it is floored, the dealer makes scheduled curtailment payments against the principal as the car ages, and the whole balance is repaid when the car sells. Terms commonly run 90 to 180 days.
What is a curtailment?
A scheduled partial repayment of the principal on a floored car, due at set intervals as the car ages, typically a percentage of the original advance. It reduces the lender's exposure to an aging unit. Missing one carries a penalty or fee; some lenders let you defer one for a flat charge, for example $95 per deferment at Kinetic Advantage.
What fees does a floor plan charge besides interest?
Lenders commonly list interest on the outstanding balance, curtailment fees, audit fees, document or title handling fees and early payoff penalties, and the structures vary widely. Ask for the complete fee schedule before signing, and model one car at 30, 60 and 90 days with every line in.
How much does a floor plan cost per day on one car?
Interest alone on a $7,000 advance at 12% a year is about $2.30 a day. Add the per-unit fees and divide by the days, and a car sold in 30 days costs roughly $4 to $5 a day all in, while a car that reaches 90 days and a curtailment costs more per day, not less, because the fees stack while the car is not earning. The rate is yours to confirm with the lender; the arithmetic is the same.
Is a floor plan worth it for a one-person lot?
It is worth it when the cars turn fast and the credit lets you stock cars you could not otherwise afford. It is expensive when cars sit, because every day of age is a day of interest and the curtailments arrive whether or not the car has sold. The test is profit per day of capital on your own cars: if your average days to sell is under 45, a floor plan usually pays; if it is over 90, it is funding your mistakes.
What happens if a floored car does not sell by the end of the term?
The balance is due. Dealers pay it off from cash, wholesale the car to clear it, or in some cases re-floor it at a cost. A car that reaches the end of a 120-day term has usually also cost two or three curtailments and the interest on the full advance, which is why the aged inventory decisions in the playbook on this site start at day 30, not day 120.