What is a "floor plan fee"?

What is a "floor plan fee"?

James Bell (Publisher, Auto Reviewer) gives expert video advice on: What does "total" mean on the sticker price?; What is a "test drive"?; What is the difference between unleaded, regular, super and diesel? and more...

Floor plan fees, or flooring as it's ofter referred to, is the cost that the dealer incurs for having the vehicle in the dealership itself. So when he takes the vehicle from the manufacturer, from the factory, he then pays a flooring company to basically hold the vehicle here until he sells it. Obviously he's going to be paying the manufacturer for that vehicle until he sells it, he needs to have a way of keeping it here and then passing the profits on to the manufacturer once the vehicle is sold. So its the inherit cost of having the vehicle here on the lot ready for you to shop. Holdback is generally referred to anything that is part of the profit margin for the dealer, and this is money that comes from the manufacturer in the form of co-op advertising, advertising support, special incentives the dealer can pass on to the sales person to push them into selling that particular vehicle. So the holdback is usually considered this little pot of money if you will that is the gurantee that the dealer will make some profit on.