To define a standardized method for calculating, tracking, and reporting the daily interest cost of a vehicle financed through a floor plan. The calculation must be performed individually for each unit to determine its actual cost of ownership and its impact on the sales margin.

2. Definition of a Floor Plan

A floor plan is an inventory line of credit used to finance the purchase of vehicles held by the dealership. Each financed unit generally has a separate balance. Interest is calculated as long as this balance remains outstanding, according to the terms set forth in the lender’s contract.

3. Basic Formula

Daily Interest = Financed Balance × Annual Rate ÷ Annual Base

The financed balance is the amount actually posted to the floor plan for the unit.
The annual rate is the effective rate specified in the contract, including the lender’s margin.
The annual basis is normally 365 days or 360 days, depending on the contract.
The calculation must use the lender’s contractual convention; it must not be assumed.

4. Calculation Example

Data	Value
Outstanding Balance	80 000,00 $
Annual Rate	8,50 %
Annual Basis	365 jours
Daily Interest	18,63 $

Calculation: $80,000.00 × 8.50% ÷ 365 = $18.63 per day.

Financed Term	Approximate Total Interest
30 days	558,90 $
90 days	1 676,70 $
180 days	3 353,40 $
365 days	6 800,00 $

5. Data to Track by Vehicle

Field	Description
Financial Institution	Lender responsible for the floor plan.
Contract/Account Number	Financing reference number.
Interest Start Date	The date on which the unit begins to accrue interest.
Initial Financed Amount	Amount posted to the floor plan at the time of initial financing.
Current Financed Balance	The balance on which interest is calculated for the day.
Reference Rate	Preferential rate, base rate, or other rate used by the lender.
Lender’s Margin	Markup added to the reference rate.
Annual Percentage Rate (APR)	Rate actually applied to the vehicle.
Annual Basis	360 or 365 days, depending on the contract.
Interest-Free Period	Number of subsidized or exempt days, if applicable.
Reimbursement Date	The date of full payment or exit from the floor plan.
Current Daily Interest	The cost of financing for the current day.
Accrued interest	The total calculated from the start of the financing.
Fixed Fees	Setup, renewal, audit, or transaction fees.

6. Calculating the Effective Rate

When the contract uses a variable rate, the effective annual rate can be calculated as follows:

Effective annual rate = Base rate + Lender’s margin

Example: Prime rate of 6.00% + margin of 2.50% = effective rate of 8.50%.

7. Special Cases to Consider

Situation	Expected Processing
Rate Variation	Create a new rate period as of the effective date. Do not retroactively recalculate previous days, unless there is an official correction.
Partial Reimbursement	Reduce the outstanding balance as of the payment date and calculate subsequent days based on the new balance.
Interest-Free Period	Calculate zero interest during the eligible period, then begin the calculation on the scheduled date.
Manufacturer Subsidy	Separately identify the portion of interest paid by the manufacturer and the portion paid by the dealer.
Fixed Fees	Add contractual fees to the cost of ownership, without confusing them with daily interest.
Unit Sold	Stop the calculation based on the contractual repayment date or the date of payment to the lender.
Delayed Payment After Sale	Continue the calculation until the actual repayment date if the lender is still charging interest.
Cancellation or Credit	Keep a record of adjustments and recalculate only the affected periods.

8. Cumulative Calculation Method

The system must calculate interest on a uniform periodic basis. A new period begins whenever the rate, the balance, or the calculation convention changes.

Determine the start date of the period.
Determine the outstanding balance applicable to this period.
Determine the annual percentage rate and the annual basis.
Calculate the number of days in the period.
Calculate the interest for the period: balance × rate ÷ basis × number of days.
Sum all periods to obtain the actual cumulative interest.

9. Example with a Rate Change

Period	Balance	Rate	Days	Interest
June 1–30	$80,000	8,50%	30	$558.90
July 1–31	$80,000	9,00%	31	$611.51
Total			61	$1,170.41

The system retains both rates and both periods. The July rate must not replace the rate used for June.

10. Vehicle Ownership Cost

To analyze actual profitability, the interest on the floor plan must be included in the unit’s ownership cost.

Cost of ownership = Cumulative interest + fixed costs + other attributable financial costs

This cost can be added to the actual cost of the vehicle to calculate the actual margin.
It must be shown separately from the purchase cost to maintain accounting transparency.
The manager must be able to view the daily cost, the cumulative cost, and the impact on the margin.

11. Proposed Business Rules

Code	Rule
RB-FP-001	Each financed vehicle must have a separate floor plan file.
RB-FP-002	The calculation must use the actual financed balance of the unit, not its sales price.
RB-FP-003	The annual basis of 360 or 365 days must be derived from the lender’s contract.
RB-FP-004	Any rate change must be dated and retain a history of previous rates.
RB-FP-005	Any partial reimbursement must adjust the balance effective as of its date.
RB-FP-006	The calculation must cease on the date the lender no longer bills for the unit.
RB-FP-007	Interest-free periods and subsidies must be recorded separately.
RB-FP-008	Accrued interest must be recalculable based on the history of the periods.
RB-FP-009	Any manual correction must include the user, date, reason, and previous value.
RB-FP-010	The interest cost must be able to be incorporated into the calculation of the vehicle’s actual margin.

12. Recommended Metrics

Metric	Purpose
Daily Interest per Vehicle	Shows the current cost of holding the unit.
Cumulative Interest per Vehicle	Shows the actual financial cost since the vehicle was added to the floor plan.
Days Financed	Measures the financial age of the unit.
Total Cost of Ownership	Sums interest and financial fees.
Projected Margin After Interest	Measures anticipated profitability, taking financing into account.
Actual Margin After Interest	Measures the final profitability after the sale.
Total Interest by Lender	Allows you to compare lenders.
Total Interest for the Inventory	Shows the overall daily and monthly cost of the fleet.

13. Recommended Display in the Vehicle Record

Displayed Item	Example
Floor Plan Status	Active
Institution	XYZ Bank
Financed Balance	$80,000.00
Effective Rate	8.50%
Annual Basis	365 days
Start Date	May 15, 2026
Days Financed	90 days
Daily Interest	$18.63
Accrued Interest	$1,676.70
Total Holding Cost	$1,826.70
Projected Margin After Financing	$7,423.30

14. Expected Results

Each financed unit has an accurate and verifiable daily calculation.
Changes in interest rates and balances are tracked by period.
The dealer knows the actual cost of financing each vehicle.
Interest costs are incorporated into margin and inventory turnover analysis.
Data can be reconciled with the lender’s statements.