Lending in powersports can be challenging, according to Chris Urban, Westlake Financial Service‘s vice president of risk management, but dealers can help power the industry to the same level as auto.
“A dealer has a part in making that deal perform, especially a lot on the intangibles that I don’t see on paper,” he said. “A dealer who is interacting with this customer for an hour or so has a better idea of how this loan will perform,” based off the consumer’s mannerisms, behavioral attributes, and “if there is a human element that doesn’t come across,” he added.
Lenders also need to educate their dealer partners on what’s a good loan to make, he said. For consumers with a lower credit score, it is important for dealers to make sure the vehicle type and loan structure is appropriate, the LTVs are kept lower, and more down payment is required.
Westlake has been working to educate its dealers “on how we look at risk and the fact that the loans need to perform for us to be able to keep lending at the terms that we are lending,” he said. “If [the loans] don’t perform you have to tighten up, and if they do perform you have to loosen up, and I think — in general — powersports dealers sometimes don’t see those things.”
“Westlake’s focus has been not just to give the dealers a program and hope that it works, but we also have our sales reps working closely with the dealers to help use the program,” Urban said. “So for the lower Fico consumer, where another lender might say, ‘Nothing below 550 Fico,’ we can get that deal done if the structure makes sense.”
The auto industry has come a long way in terms of technology innovation and more lending auctions, Urban said. “That’s what I’d like powersports to trend towards.”