Dealer Steve Cook is still paying off the store renovations he made six years ago.
Yet he's ready to take out another loan to help pay for about $600,000 in additional store improvements.
"I'll try to pay for renovations with a loan rather than spend my own cash, then regret it if there's a double dip in the economy," says Cook, owner of Cook Chevrolet-Buick in Vassar, Mich.
Many lenders expect the number of commercial loans to car dealers to rise by as much as 10 percent this year as some manufacturers push dealership facility facelifts. Throw in low interest rates and loans can be appealing.
Lenders also expect many dealers to extend their floorplan borrowing because some industry analysts predict U.S. light-vehicle sales could hit 14 million units this year.
"We are seeing requests on the commercial real estate side related to loans on dealer expansion or renovation," says Mark Sesler, manager of the dealer finance line of business at Fifth Third Bank in Cincinnati.
"Floorplans are increasing, too, due to the economy with dealers selling more cars. Our customers who have franchises from Japan, we're seeing increases along those lines as that sector begins to rebound."
Fifth Third Bank is so confident of the impending boost to business that it's looking to add four loan sales representatives to work with dealers in Florida, Kentucky, western Pennsylvania and central Indiana.
During the recession, many manufacturers eased off pressing dealers to renovate stores. But that has changed.