Floor Plan Lending Ucc

Floor plan lender thus allowing the retail lender s lien to take first priority.

Floor plan lending ucc. The loans are often made with a one year term and based on an aggregate budget. For example a dealer might be able to borrow 10 million over the year to purchase 300. Floor planning is a form of financing for large ticket items displayed on showroom floors. When a certificate of title is not transferred to the buyer the court in bank one found that a buyer s purchase of a vehicle was not sufficient.

The dealer then receives payment hopefully including a profit and remits the balance to the lender who in turn releases the title to the car to the new purchaser. Find out how nextgear capital dealers are tackling the challenges of today s market head on by properly utilizing their lines of credit. Floor plan lenders include local and regional banks large national banks and financing companies owned by the manufacturing companies like toyota financial or ford credit. This booklet applies to the occ s supervision of national banks and federal savings associations.

The debtor later filed for bankruptcy and the lender continued to hold the certificates of title after subsequent sales to consumers as a means. Although the lender filed a ucc 1 financing statement to perfect its lien the floor plan loan agreement also required all original vehicle title documents to be transferred to and held by the lender. The nationwide industry standard process is called floor plan lending and it works like this. This booklet addresses the risks associated with floor plan lending and discusses risk management practices for floor plan lending.

Supplementing working cash with a floor plan is a tried and true method to grow business. Floor plan lending is a form of inventory financing for a dealer of consumer or commercial goods in which each loan advance is made against a specific piece of collateral. In order to facilitate the ability of lenders to floor plan or otherwise finance the acquisition of inventory by dealers of titled equipment the ucc in almost all states provides that filing a financing statement is the proper method of perfection d uring any period in which collateral subject to a state certificate of title law is. Uniform commercial code ucc requires a bank to enter into a security agreement with the.

The dispute arose because the floor plan lender refused to turn over possession of the certificate of title. Based upon what the car dealer thinks will sell the best the new car dealer places its new car orders with the manufacturer.