Alternative data “is definitely not being utilized as much as it should be” in powersports lending, according to Ryan Keefe, director of marketing at National Powersport Auctions.
The powersports space is “much more dynamic,” he told Powersports Finance. Lenders have their own “unique formulas to determine credit risk” because they don’t use a standard forecasting or budgeting model.
FactorTrust, the alternative credit bureau, is striving to jump into the powersports space and bring more awareness of the many uses of alternative data in lending practices. The company is in the testing phase and conducting data studies with three powersports lenders.
Alternative data can help mitigate risk in credit decisions and make the buying process “as painless as possible,” Scott Brackin, FactorTrust’s vice president of auto finance, told Powersports Finance.
“Powersports lenders have not traditionally been big users of alternative data,” Brackin said. “For the buying process to get to where the auto process is today, the technology infrastructure needs to be greatly enhanced,” and the amount of time to get a deal placed needs to be decreased.
“If you walk into a powersports dealership today, you don’t walk out with a vehicle in five minutes like you do in the auto industry,” he said. “Utilizing additional data sources can make the buying process less obtrusive — especially for the nonprime consumer,” and can help make that “yes” decision happen more often at the dealership, Brackin added.