Direct Lending Offers Few Financing Opportunities to Subprime Powersports Consumers

Unlike subprime auto shoppers, powersports consumers with poor credit histories can rarely use online direct lending platforms to explore financing options and shop for better rates, Fran O’Hagan, chief executive and founder of marketing solutions company Pied Piper, told Powersports Finance.

O’Hagan splits powersports consumers into two categories: those who purchase purely for fun, and those who purchase partly for work. Those in the latter category, for example, are buying UTVs for job sites or their own properties, so they tend to be creditworthy and are likely to be approved for a loan directly online.

“For the other group of buyers, it can be really difficult to get financed,” O’Hagan said. “A company like Honda, when they are determining whether to finance someone for a motorcycle, they are not looking at it as a secured asset. They are looking at it as an unsecured loan because they can’t count on getting the unit back.”

In the auto industry, by comparison, there’s a greater chance vehicles will eventually return to inventory. It’s easier to hide a motorcycle than it is a car, so powersports customers with poor credit will be less likely to find financing, even through direct lending, Hagan said.

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