Repossession is not limited to consumers who default on their car notes. It also happens when dealers default on the obligations outlined in a Floorplan Financing Agreement. In this article, we’ll discuss how to navigate Floorplan Financing Agreements to protect yourself from repossession.
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Floorplan Financing Agreements & Repossession
When we think of repossession, we think of a repo man showing up at someone’s driveway, apartment complex, or parking lot at 2:00 in the morning or 3:00 in the morning to pick up a car when everybody’s sleeping. That’s standard thought for consumer repossession. But what happens when a floorplan financing company finds their dealer is in default and decides to repossess the vehicles? Believe it or not, it’s the same thing. The floorplan company, because they’re secured, can show up at any time of day or night to repossess any vehicles that fall under your agreement.
What is more, they often come in with multiple trucks in a coordinated effort to pick up whatever inventory possible. The floorplan financier can come while you are open for business or in the middle of the night when you are not there. It’s hard to believe, but we at Lefkoff have seen it happen.
How Can Dealers Protect Their Dealerships
Who’s allowed to do what and under what circumstances will differ from contract to contract when it comes to floorplan financing. Just know that generally speaking because floorplan financing companies are secured, they have the ability to come in and repossess all of the property that is securing the financing agreement (which can include multiple vehicles on the lot, as referenced above). It is highly recommended dealers fully understand their floorplan financing agreement and honor it. We understand that such agreements are lengthy and can feel dense or vague; therefore, we always recommend dealers have a law firm examine their contracts.
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