What Is Floor Plan Financing Interest

The money borrowed from the bank collects interest and one has the choice to either make a minimum payment or pay off the balance in full when the bill is due.

What is floor plan financing interest.

Dealerships that take the floor plan financing interest exclusion in computing their limit can t claim 100 bonus depreciation for their fixed asset additions. But it came at a cost. So how does floor plan financing work. Floor plan financing interest expense.

Floor plan lending is a form of inventory financing for a dealer of consumer or commercial goods in which each loan advance is made against a specific piece of collateral. What you don t realize is that like most new car dealers a floor plan was used to finance the cars. Floor plan financing interest expense remained fully deductible under tax reform. Floor plan financing interest expense is interest on debt used to finance the acquisition of motor vehicles held for sale or lease where the debt is secured by the acquired inventory.

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. Floor plan financing interest expense is not subject to the section 163 j limitation.