Question

What are the pros and cons of the financing option of floorplanning.

Answer 1

Floorplanning of financing method is basically for a big retailers, showroom owners like dealers of high cost automobiles. It is a kind of short term loan facility.

Pros:

1. Dealers get loan facility according to their need within a short period

2. Financiers usually customize the deals according to the need of the customers

3. Both the parties involved will be under certain percentage of control of the assets.

Cons:

1. Dealers have to be very careful because the financing option may exceed ones ability to repay

2. Lender has to physically check for the inventory status and his risk is covered or not