Heightened competition in the industry, coupled with pent-up demand, post recession, have caused some financial providers to loosen their credit qualifications, experts say.
“The last recession we had put a lot of people who were probably of average credit worthiness into subprime,” Lenny Sims, vice president of operations at NADAguides, previously told Powersports Finance. “740 is the new 640 in terms of Fico score. Even if their credit hasn’t changed, the market looks at them as being less creditworthy.”
Due to that decline, some lenders — like Westlake Financial Services — are beginning to look beyond credit scores, and instead gauging a borrower’s stability on a number of factors when making loan and lease approval decisions.
“We are a risk-based lender, so we look at a lot of factors when we make a deal — credit, resident and job stability, and payment history,” David Goff, Westlake’s assistant vice president of marketing, told Powersports Finance. “Each customer for us is unique, so you could look on paper and you could see two customers looking similar due to their stability and income, but their credit wouldn’t be similar. Credit is a big component — and stability and ability to pay is huge,” he added.
Westlake Financial Services also offers financing to thin-file and first-time buyers, Goff said. About 65% to 70% of borrowers are near prime, and the remaining percentage fall into subprime or below.
“We base on capability, stability, and auto history,” Valerie Figueroa, Excel Finance’s dealer relations manager, told Powersports Finance. “I’ve seen a credit score as low as 450 get approved but it’s because they had excellent auto history and had long-term employment and homeowner status. There’s several different aspects that we look at,” she added.