The threshold limit of balance sheet for automobile dealer is not defined by any law or regulation. However, there are some industry standards that are commonly used.
For example, the National Automobile Dealers Association (NADA) recommends that automobile dealers have a minimum net worth of 250,000 and a minimum working capital of 100,000.
These standards are not legally binding, but they can be used by lenders and other creditors to assess the financial strength of an automobile dealer.
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Here are some other factors that lenders and creditors may consider when setting a threshold limit for automobile dealers:
- The size of the dealership
- The type of vehicles sold
- The location of the dealership
- The dealer’s experience and track record
- The financial condition of the dealership
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