Despite the perceived risk in powersports finance, CAR Financial Services — a cash flow and collection services provider for dealers in the buy-here, pay-here market — is looking to expand its dealer network “where it makes sense,” according to Perry Allen, CAR’s area manager.
A general perception among many lenders is that powersports finance is more challenging than auto, Allen told Powersports Finance. “There’s a perceived higher risk in powersports” because those vehicles are considered a “discretionary expense, and if the economy does turn, it’s one of the first areas in the performance portfolio that will drop,” Allen said.
CAR has been providing collections services to Buy Your Motorcycle for three years, according to Brad Van Horn, the dealership’s owner. The relationship was struck due to a “lack of adequate programs” from current subprime lenders in the industry, Van Horn previously said. The industry needs “more subprime lending with lower fees,” because many subprime lenders have thousand-dollar fees, he added.
“With CAR Financial Services, my subprime portfolio with them performs better than prime, and the repossession rates and default rates are lower,” Van Horn said. This is primarily due to subprime consumers not wanting to “burn their bridges,” he added. “For the subprime customer, it means more to them to keep the bike than anything else,” because it can be difficult for them to get approved.
Atlanta, Ga.-based CAR Financial Services attributes its success in the subprime market to “getting a good down payment — 50% of the cost of the bike, if not more,” Allen said. After receiving proof of income and residence, it’s also important to have great customer service, he added.
Throughout 2016, CAR Financial looks to maintain its current dealer relationships, expand its network to “other dealerships serving the underserved credit customer,” and “be more involved in the powersports industry in general,” Allen said.
“I’m very positive about the outlook for the economy,” Allen said. The strong economy “translates into demand for what most consider to be a luxury expense,” and “I see [the industry] as only getting better.”