While traditional lenders in the space have been reticent to dip down the credit spectrum with competitive interest rates, credit unions are starting to capture the “meat of the market,” Chris Clovis, owner and operator of Freedom EuroCycle, said at PowerSports Finance 2017.
“What we’ve seen, particularly in the last year, are credit unions coming in — sometimes kicking and screaming — and starting to dominate that [near-prime] space,” he said.
Credit unions are getting those deals because they offer competitive rates on sportbikes, not because their communication is superior, he added.
“The biggest problem we’ve had with credit unions is their turnaround time is extremely slow, and they take the longest to get the approval,” Clovis said.
Despite slower communication, credit unions are capturing near-prime millennial buyers that other lenders are unwilling to underwrite, he added.
“This notion that a millennial has a six-figure income with a 720 Fico is absolutely false,” Clovis said. “Your millennial customer is a thin-file. Your millennial customer has a sub-650 Fico, and we don’t have a good product for them.”