Floor plan and bank loan interest use the same formula, principal x APR / 365, but they charge it on different principal. A floor plan advance is tied to one car and ends when that car sells. A bank term loan charges on the whole open balance until you pay it down. That is why the cheaper-looking APR is not always the cheaper holding cost.
- Daily interest
- $2.63
- Daily total (interest + overhead)
- $2.63
- Total holding cost over 45 days
- $118.36
- Break-even price drop
- $118.36 (1.0% of cost)
Calculator assumptions: a $12,000 unit at 8% APR held 45 days with $0 daily overhead; replace with your own numbers. Estimates only. Also available as the standalone holding cost calculator.
In our hypothetical, three $8,000 cars sold on days 12, 20 and 60 cost about $161 of floor plan interest at 8%. The same cars bought on a $24,000 bank loan at 9% and left open until day 60 cost about $355. The rates are illustrative. Use your own.
LocalIQ™ market snapshot
What top flip candidates are asking right now
| Model | Listings | Median asking price |
|---|---|---|
| GMC Sierra 1500 | 632 | $29,972 |
| Honda Civic | 5,396 | $15,000 |
| Honda Accord | 4,176 | $15,999 |
| Ford F-150 | 3,134 | $24,000 |
| Toyota Corolla | 3,040 | $14,500 |
| Nissan Sentra | 3,004 | $9,880 |
| Toyota Camry | 2,510 | $17,082 |
| Hyundai Elantra | 2,396 | $9,499 |
LocalIQ™ asking-price median · 24,288 listings · updated every 6 hours. National, last 8 model years; asking price is your resale ceiling.
What is holding cost for a car dealer?
Holding cost is what it costs to own a car for each day it is unsold. Interest is one part. Insurance, lot and utility costs, and the labor of keeping the car in sellable shape are the others.
Cox Automotive spreads the whole operation across the stock with one formula: take total monthly expenses, subtract monthly selling expenses, divide by units in stock, then by selling days. In its worked example that is $148,485 minus $57,437, a $91,048 monthly holding cost, over 85 units, or $1,071.15 per unit per month. Over 24 selling days it is $44.63 per unit per day (Cox Automotive, "Three Floor Plan Finance Formulas Every Dealer Should Know", checked 2026-10). That is one dealership's example, not a benchmark for yours.
Your lender's rate is a slice of that. This post is about the slice, and how the form of the credit changes it.
How does floor plan interest work?
Corpay describes floor plan financing as "a revolving credit line secured by vehicle inventory." Draws are tied to specific vehicles, interest begins accruing as soon as the lender funds a unit, and rates are quoted as a spread over a published benchmark, typically prime or SOFR (Corpay, floor plan financing, checked 2026-10).
Its formula is the one we use: all-in annual rate, divided by 365, times the amount advanced and the days held. Its example is a unit at about $49,307 held 76 days at a 7% all-in rate, which costs roughly $700.
Two features matter for holding cost:
- The meter is per car. A slow unit costs more than a fast one, and a sold unit stops costing anything.
- Curtailments. Corpay defines a curtailment as a required principal reduction on a unit floored past a threshold, typically 90 or 120 days depending on the program, due whether or not the car has sold. Your agreement sets yours.
How does a bank loan differ?
A term loan or line of credit from a bank gives you a pool of money, not a per-car advance. Interest accrues daily on the outstanding principal. The loan does not know which cars are sold. If you use $24,000 to buy three cars and sell one, you still owe interest on $24,000 until you pay it down.
That is not a flaw. It is a different structure with different habits:
- You decide when to pay down, so discipline replaces the lender's per-unit clock.
- Whether early payoff costs anything depends on your loan agreement. Check it before you assume you can pay each car's share the day it sells.
- Fees, collateral and covenants differ by lender. We do not quote typical terms here. Read the paper.
Worked example: three cars, two structures
All rates are hypothetical, chosen to make the structure visible. Each car costs $8,000. They sell on day 12, day 20 and day 60.
Floor plan at 8%. Daily interest per car: $8,000 x 0.08 / 365 = $1.75. Total car-days: 12 + 20 + 60 = 92. Interest: 92 x $1.75 = $161.
Bank loan at 9%, $24,000 borrowed, nothing repaid until day 60. Daily interest: $24,000 x 0.09 / 365 = $5.92. For 60 days: $355.
Same bank loan, but you pay each car's $8,000 back the day it sells (assuming no penalty). Days 0 to 12 on $24,000, days 12 to 20 on $16,000, days 20 to 60 on $8,000. Interest: about $181.
| Structure | Rate | Interest on the three cars |
|---|---|---|
| Floor plan, per car | 8% | about $161 |
| Bank loan, paid down at each sale | 9% | about $181 |
| Bank loan, left open to day 60 | 9% | about $355 |
Same cars, same days, a bit more than double the interest, from one habit. The loan with the higher APR only loses by a small margin if you pay it down as you sell. If you do not, the gap opens. Flip the rates and the floor plan can lose. That is the point of running the numbers rather than trusting either label.
Which one is cheaper for your lot?
Run both with your own inputs.
- Floor plan: unit cost x APR / 365 gives daily interest per car. Multiply by that car's days held.
- Loan: balance x APR / 365 for each stretch the balance is constant. Add them.
- Add fees. Origination, audit, curtailment, annual or unused-line fees all belong in the comparison. We do not quote any, because they are lender-specific.
- Add overhead per day that applies either way: insurance, lot, utilities.
- Use your real days-to-sell. In our Q3 2026 data the average timed sale took 14.6 days and 70.0% closed within 15 days (n=32,691). These are marketplace listings, not dealer-lot records, and days to sell is the average of last seen minus first seen over sold listings seen on two or more crawls. See how long it takes to sell a used car and the Q3 study.
The holding cost calculator handles step 1 and the overhead and returns a break-even price drop: the holding cost of the days you would otherwise wait. For the cost side of the car you are financing, the auction total cost guide and floor plan cost per day post fill in the rest.
The practical takeaway
Compare structures by the interest you would actually pay on your cars, not by the rate on the quote. A per-car meter punishes slow cars and forgives fast ones. A pooled balance rewards discipline and punishes drift. Whichever you hold, put the days in the formula before you set a max bid.
Put holding cost into your max bid.
The holding cost calculator returns daily interest, total holding cost and the break-even price drop for your APR and days held. CarFlipIQ adds local days to sell by model. 5 free car analyses, no credit card.