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

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Accounting and Finance


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.