Long-term lending has been “bread and butter” for Harley Davidson Financial Services for years, a company executive said during the American Financial Services Association‘s Credit Summit for Fixed Income Investors in late May.
About 20% of the company’s originations fall into the subprime category, said Julia Landes, director of securitization at HDFS. “We are not new to subprime, we have been in the market of lending to subprime consumers for 18 years, so it’s a strategic advantage for us,” Landes said. “We maintained subprime lending throughout the crisis — we didn’t pull back — and we are not changing today in response to a very heated lending market.”
Borrowers can apply for Harley-Davidson loans with a Fico score as low as 510. The loan terms stretch to 84 months. In fact, about 40% of the company’s originations fall in the 84-month category, with “very little” subvention in the business, according to Landes.
For auto lenders, “72 to 84 months is kind of a new territory, but 84-month lending has been our bread and butter for 15 or more years,” Landes said. “We are very comfortable in that space, and we continue to benefit from our strength in that area.”