The real daily cost of an aged unit (incl. curtailment)

How much does an aged unit cost per day? Daily floor plan interest is the amount financed times the annual rate, divided by 365. Curtailment, a required paydown after a set number of days, pulls cash out of the store on top of that. Your floor plan agreement is the final authority on how your lender calculates both.

Every new unit on your lot costs money while it waits for a customer. Fewer managers can say, for a specific unit on a specific day, what one more week will cost. This post shows how to work it out with your own numbers. We use clearly labeled examples, not market statistics.

How do I calculate floor plan interest per day?

Most lenders charge interest on the amount drawn for each unit, at an annual rate, accrued daily.

Daily interest = amount financed × annual rate ÷ 365

Some lenders use 360 days, and some compound or bill on different cycles. Check your agreement. For a quick estimate, 365 is close enough.

Nine dollars a day doesn't sound like much. Multiply it across every unit past your target turn and it becomes a real line on the monthly statement.

What is curtailment, and is it a cost?

Curtailment is a required paydown on a unit that has been on the floor plan for a set period. After a certain number of days, you owe a percentage of the original amount, and sometimes more at later checkpoints.

It isn't an expense like interest. You are paying down principal, so the money isn't lost. But it is cash leaving the store, tied up in a unit that hasn't sold.

When curtailment is coming, ask not only "what does another month cost?" but "do I want $4,500 more of my cash sitting in this unit?"

What costs don't show up on the statement?

• Model-year rollover. As the next model year arrives, a current unit can start to look old and your negotiating room shrinks.
• Incentive changes. A unit that qualified for a program this month may not next month.
• Lot space and attention. An aged unit still needs washing, moving, charging (for EVs) and a spot a fresher unit could use.
• Opportunity cost. The money and floor plan line tied up could finance a unit that sells in two weeks.

We don't put numbers on these because they depend on your store, brand and market. They all point the same way: the longer a unit sits, the more it costs to keep.

When should I hold and when should I move a unit?

Compare three choices:

1. Hold another N days and hope for a retail customer.
2. Trade it to another dealer.
3. Send it to auction or wholesale.

Holding costs interest (and maybe curtailment cash). Trading costs you no fee: selling is free, and the buyer pays the platform fee and freight. Your cost is whatever you give up on price. Auction or wholesale costs the gap between what you get and what you owe, plus fees and transport.

The answer depends on your numbers. If the unit is likely to retail in the next 30 days, holding may be right. If not, every week makes the hold more expensive. For a wider comparison, read what each exit really costs.

Who pays the fee and freight on a trade?

The buyer. Selling on Locates.io is free. The buyer pays the $199 per unit platform fee and the freight charge, and both show itemized before signing. If you need a unit to move, your lever is price: set it under invoice. See pricing.

Is there a calculator?

Yes. The Hold vs Move calculator does this math for a group of units. You enter your average invoice, floor plan rate, days in stock, how many more days you'd hold, an optional curtailment percentage and day, and the loss you'd expect at auction. It shows interest per unit per day, the cost to hold, the cost to move now on Locates.io and the cost at auction, per unit and in total.

Every assumption is on the page, and every default is an example you can change. Nothing in it is a quote.

The short version

An aged unit costs daily interest (amount financed × rate ÷ 365), and curtailment can pull a chunk of cash out on a set day. Add the unbilled costs and the case for deciding early gets stronger. Put in your own numbers, compare hold, trade and auction, and decide before the next curtailment date decides for you. The aged inventory field guide goes deeper.