hotrodrock Posted March 12, 2009 Report Share Posted March 12, 2009 How long does a Ford dealer have to pay for new cars that he has received from Ford? They are usually financed thru Ford aren't they? I have read that the longer a car goes unsold, the more interest they pay, which makes sense. Seems there would be a cutoff point somewhere though. Just thinking of all those '08 GT500s and KRs sitting on lots which are not likely to be sold anytime soon. Guess that goes for '09s as well. Saw one dealer advertising that he had 3 KR's on his lot. Got to believe that he's in trouble as far as selling those go. Dealers were probably drooling several months ago over the profits they were expecting, but how long can they keep them without going in the hole? Link to comment Share on other sites More sharing options...
portside Posted March 15, 2009 Report Share Posted March 15, 2009 How long does a Ford dealer have to pay for new cars that he has received from Ford? They are usually financed thru Ford aren't they? I have read that the longer a car goes unsold, the more interest they pay, which makes sense. Seems there would be a cutoff point somewhere though. Just thinking of all those '08 GT500s and KRs sitting on lots which are not likely to be sold anytime soon. Guess that goes for '09s as well. Saw one dealer advertising that he had 3 KR's on his lot. Got to believe that he's in trouble as far as selling those go. Dealers were probably drooling several months ago over the profits they were expecting, but how long can they keep them without going in the hole? I own a dealership, though not Ford. If a dealer pays for a car when it is delivered, he will pay no interest charges on the value of the car. This requires large cash reserves, and many dealers cannot afford this. If a dealer "floors" his inventory, he is taking a loan from his floorplan lender for the value of each and every car that he borrows against in this fashion. Floor plan interest is a major expense for dealers. Many OEMs do not actually lend this money, but rather they use LARGE banks like Duetsche Financial Services, G.E. and many others. Regardless of who he actually pays, this prime-plus floor plan interest (depending on the lender, of course) can be about .8% of the dealer cost on the unit per month. Dealer cost = $63,000, monthly interest can be about $500.00. Doesn't take long to add up when there are 100 cars on the lot. (Then, in a completely separate transaction, these LARGE banks waddle up to Capitol Hill and get a dump truck load of taxpayer money, but I digress...) Many OEMs offer cash discounts or "free flooring" for short periods like 30, 60, 90 days, but it is not as simple as it sounds. This is true for any dealership using a floor plan lender for their inventory. The only "cut-off point" is when the dealer pays the lender for the vehicle! Link to comment Share on other sites More sharing options...
Michael Morris Posted March 15, 2009 Report Share Posted March 15, 2009 As a ford dealer, we start paying interest on the car as soon as it leaves the plant. Sometimes it might take a couple of weeks for the car to get here and we have been paying on the entire time. I agree with the second poster. The interest keeps going until its payed off! MM Link to comment Share on other sites More sharing options...
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