10.1108/03074359910766127">
 

Title

Selecting optimal executive compensation scheme under uncertainty and the role of the covariance factors

Document Type

Article

Publication Date

1999

Department

Accounting and Finance

Abstract

Floor plan financing involves the financing of automobile inventory at the dealer's lot by either a bank or a finance company. In a typical floor plan financing arrangement, the dealer borrows money from a bank or other lender to buy cars from the manufacturer and then repays the money when the cars are sold. A floor plan is typically done for a 90-day term. If a dealer is unable to pay within 90 days, the flooring company may grant 30-day extensions. For floor plan lenders, the recent downturn in car and truck sales means that they should take appropriate steps to safeguard their financial interests. They need to institute a proactive plan of default management. Lenders should evaluate their existing loss-mitigation servicing and collection policies. Floor-plan financing links the loan tightly to the collateral. This model will continue to be a viable one since it requires both the lender and the borrowing dealer to work in close cooperation.