LAS VEGAS — Powersports finance often reflects trends occurring in auto finance, and as loan terms for automobiles expand, so do terms within powersports.
Loan terms in auto finance have reached a high of 69.3 months in June, up 6.8% from five years ago, according to Edmunds.com data. Powersports finance companies like Texas Dow Employees Credit Union (TDECU), Yamaha Motor Finance Corp. USA, and Dealer Direct have all been feeling the push as well.
Dealer Direct is willing to go up to 84-months for an “expensive” side-by-side vehicle, for example, Jon Vestal, the lender’s national sales director, said during a panel discussion at Powersports Finance 2017 last week. However, “we don’t like to do that,” he said, adding that 60 months is the preferred cap on loan terms.
Meanwhile, TDECU is looking at reigning in its loan terms. Term lengths were not disclosed during the panel, but its website states that auto loans can be as long as 72 months.
“We really haven’t extended terms lately,” said Chuck Smith, TDECU’s senior vice president and chief lending officer. “We’ve done a lot of that and as a matter-of-fact, I’d like to pull back a little bit on long terms, to be quite honest.”
But loan terms can be beneficial if used strategically as a marketing and sales tool, according to Lyndon Elam, vice president of retail sales, marketing, and operations at Yamaha Finance.
“We will use terms as an asset to target specific products,” he said, but added the caveat that extending loans terms is “not a big area of focus for us right now.”
Motorcycle terms at Yamaha extended year over year, Elam said, but only slightly. Yamaha’s average term is up less than 1% with approximately 6% of loans above 60 months.