Cash vs Credit: How to Know What Is Best for Your Dealership?
2 mins
Trying to decide between cash and credit to help fill up your lot? Each comes with its own benefits to help you maximize your inventory. Let’s compare the two to help guide you to make the best decision for your dealership.
Cash payable through ACH
For many dealers, the ideal purchasing option when it comes to buying vehicles is to use cash, if you have it. By paying with cash, you are able to acquire the vehicles you want without incurring any additional costs like fees or interest.
Using cash enables a straightforward and direct transaction process, which allows you to streamline your purchasing process while also being more efficient and cost-effective when buying new vehicles for your lot.
There is a downside of using cash to consider though. By using cash you are tying up your cash in your inventory, as opposed to expanding your buying power with a line of credit. In economics, this is known as the opportunity cost. If you are a dealer trying to expand your business this can make growing your lot more difficult.
Credit
Is cash tight? Floorplan financing is a great way to help you purchase inventory without using the cash you have on hand. Floorplan financing works by providing automotive dealers with a revolving line of credit so that you can purchase vehicles to stock up your lot.
Just like with any loan, you will have to pay interest and fees on the amount you borrow. This financing option gives you business flexibility, allowing you the opportunity to grow your dealership and improve your cash flow. Even if you have the cash on hand, using a floorplan can be a great way to free up your money. You can learn more about funding your inventory with floorplan financing by checking out this blog.
AFC, an OPENLANE sister company, is OPENLANE’s preferred floorplan provider. AFC offers dealer financing options customizable to your unique needs to help expand your inventory. To learn more about how AFC can help your dealership and connect with an AFC representative dedicated to you, click here.
Use your cash or floorplan on OPENLANE now!
From California to Maine, Oregon to Florida and everywhere in between, OPENLANE is here to help you buy the vehicles you want with whatever payment method you choose. Sign into your account today or sign up to start buying.
Disclaimer: Descriptions of AFC floorplans are for illustrative purposes only. Terms of AFC floorplan financing are subject to a final written agreement acceptable with AFC. AFC does not guarantee any results for floorplan financing and examples are for illustrative purposes only. Dealers should consult their own advisors to make independent business decisions regarding floorplan financing.