Independent Dealer Struggles to Obtain Financing for Thin Files

Dream Machines of Texas, an independent dealership specializing in used Harley-Davidsons, is unable to finance thin-file customers because lenders are unwilling to take the risk of financing them, the dealer’s Finance Manager Hope Hill told Powersports Finance.

Thin files are consumers who have next to no credit, and nowadays they are mostly millennials: young, mid-to-late twenty-somethings, who may have a good income but have never financed anything before. This credit history makes it difficult for lenders to take them on because they don’t meet basic requirements.

“Most of our lender requirements aren’t geared for thin files,” Hill explained. “[Lenders] want stability. I get it because it’s a recreational vehicle, but most of our lenders require at least 24 months of an auto installment, and then one other line of credit and these [consumers] don’t have that auto credit for one reason or another.”

Part of the reason that this group of thin files is risky is that they typically have large amounts of debt, such as students loans. For average consumers, 11% of their income debt is going towards student loans, according to the Household Debt and Credit quarterly report. With this amount of debt, recreational vehicles aren’t a priority for millennials, but that doesn’t mean that there aren’t first-time buyer programs available to them. The trouble is, these programs aren’t readily available to an independent dealership.

“What I am finding out talking to different people in the industry is that a lot of these programs for first-time buyers and thin files, they are out there, but they are only made for franchise dealers,” Hill said.

These programs are constructed for new vehicles, but used vehicles are typically a better option for buyers looking for an entry bike.

“If you are going to be a first-time buyer, it’s a smarter deal to purchase something pre-owned, because if you buy something brand-new, it depreciates so quickly and you’re stuck in it for so long,” Hill added. “The smarter buy is to buy used, something a little bit cheaper you can get out of if you decide that you are just not a motorcycle person.”

At the moment, leasing is the only option available to Dream Machine when it comes to financing thin files. However, consumers wanting to own a bike are sometimes confused when all they are given is a leasing package — no matter how strong that finance package might be.

“I have a lot of customers where their score is 650, 660, and even over 700 and they come to me, and I’m hitting them with lease programs, and they don’t understand,” Hill said. “If you go buy a car, you are going to be at 3% [interest]. But for a motorcycle, I can’t get you financed.”

Don’t let opportunity ride by. Join us for PowerSports Finance 2018 on Nov. 6-7 at the Omni Fort Worth. Go to for details and to register.

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