As the owner of a car dealership, your goal is to get customers to walk out with a new vehicle, but that means buying more inventory for your lot. Buying cars at auction or directly from the manufacturer is expensive, and you’ll more than likely need some type of financing to do it.

Below, discover how 1803 Capital's specialized inventory financing and financial services for car dealers can assist you in expanding your inventory.

Types of Car Dealer Inventory Financing

Car dealer inventory financing gives you the capital to purchase vehicles for your dealership. Some financing types limit their uses to vehicle purchases, while others let you use the funds for extraneous expenses like office supplies or vehicle maintenance. 

Like any type of financing, inventory financing comes with fees and/or interest that you need to fully understand before committing to the loan. Taking the time to read the terms of your financing agreement and working with a knowledgeable, helpful lender can help you make the smartest financial decision for your dealership.

Floor Plan Financing

Think of floor plan financing as a type of credit card that you can use to buy inventory for your dealership. Floor plan financing companies extend you a line of credit, which you can use to purchase vehicles from manufacturers, auctions, and other sources.

If you sell a car purchased with floor plan financing, you use the money from the sale to pay off your loan. If you don’t sell the car in a certain amount of time, the financing company charges you a small fee.

This auto dealer stock financing option is popular because the actual sale price of inventory is usually worth more than the loan. While the most common use of this loan type is to purchase inventory, you also have the flexibility to use the extra cash for other dealership expenses, like vehicle maintenance.

Business Loans

Business loans are a common type of car lot inventory funding. Also called term loans, they’re based on the total value of your dealership’s inventory. 

Unlike floor plan financing, which is a revolving line of credit, business loans are a one-time deal. You’ll need to either pay off your loan a little at a set time or pay it off once you’ve sold your inventory.



Business loans are best when you need cash to buy inventory immediately. However, not all business loans are created equally; you’ll want to search for an option with a low interest rate and fair loan terms that account for the amount of time your dealership needs to sell your stock.

Accounts Receivable Financing

If customers owe money to your business, that’s called accounts receivable, or AR. What can you do if customers don’t pay off their auto loans for the cars you sold them? Collecting money due is a hassle, and that’s less cash you have on hand to buy more inventory.

One option is to sell AR to a factoring company, which then attempts to collect the amounts themselves. You would essentially take out a loan against your outstanding invoices for a fee. 

This automotive inventory financing option is convenient if you’re struggling to get customers to pay up. However, the amount you can borrow is limited by your total outstanding payments. 



You won’t be able to sell the AR for the original amount of the receivables, as the factoring company will need to put its own time and resources into collecting the bills. But this option does leave you with capital that you may not otherwise have access to, especially from customers who never pay their overdue bills.

Flexible Car Lot Inventory Funding for Dealers

If you’re looking for car dealer financing options that put car ownership within reach for credit-challenged customers, reach out to 1803 Capital Services. We specialize in financing for customers with poor credit and those who have yet to establish credit.

To learn more about car dealer inventory financing, contact us at (866) 890-2415.