Flooring Finance Definition

What you don t realize is that like most new car dealers a floor plan was used to finance the cars.

Flooring finance definition.

Also the price at which a stop order is activated when the price drops low enough to activate such an order. Floor planning is a type of inventory financing for large ticket retail items. It is often referred to in the it industry regarding credit lines for computer equipment. In context of interest rates a level which an interest rate or currency is structured not to go below.

A flooring account is a type of short term financing that is used specifically for equipment purchases. Simply it is a way for an auto dealer to use a lender s funds to finance the cars and until each of them is sold the lender holds title to the cars. A floor in finance may refer to several things including the lowest acceptable limit the lowest guaranteed limit or the physical space where trading occurs. An interest rate cap is a derivative in which the buyer receives payments at the end of each period in which the interest rate exceeds the agreed strike price an example of a cap would be an agreement to receive a payment for each month the libor rate exceeds 2 5.

Floor plan finance companies are uniquely attuned to the needs of auto dealers. They are most frequently taken out for periods of between 2 and 5 years although this can vary considerably. In addition to freeing up the cash a dealer has on hand other floor plan financing benefits. Retailers use a short term loan to purchase inventory items and the loan is repaid as inventory is sold.

Floor the area of a stock exchange where active trading occurs.