After a six-month study into machine learning, MotoLease will be making changes to its program to reach more subprime consumers and enable them to build their credit score, Managing Partner Emre Ucer told Powersports Finance.
MotoLease will categorize borrowers into three groups: Fast Track, Select, and Credit Builder. Fast Track is for prime customers and puts borrowers in the “fast lane to exit the dealership,” as a more simplified way to get approvals, Ucer said.
Select is for near-prime consumers, and Credit Builder is for subprime. Specifically, the Credit Builder category is for consumers who may have had credit challenges that affected their credit score. By making on-time payments, consumers can raise their credit score and, in 12 to 18 months, become eligible to have their lease re-priced and advance to the Select group.
“The key point is to pinpoint either subprime or near-prime people who may have a low score for various reasons,” Ucer said. “However, for our purposes, they may represent a still relatively lower risk that we can put them in upper credit tiers and much more competitive pricing.”
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To better identify these subprime consumers, MotoLease launched a study into machine learning. Through the study, the company was able to implement program changes based around a new scoring algorithm that tailors itself to each customer.
“The scoring is dynamically adapting, and it’s not a static score,” Ucer said. “Let’s say one variable may have a lot of weight on your score and a lot less weight on mine. It is dynamic, and it’s custom tailored to each person.”
Previously, MotoLease operated with six credit tiers and a different fee structure, so the changes simplify the program and make it easier for dealerships to understand. “[Dealers are] bombarded with so many marketing materials, program sheets, and financing programs from OEMs and finance companies that they don’t have the time to really understand all the details of everything,” Ucer said. “We said, ‘Okay, how can we simplify the program to the point that they don’t need to spend too much time trying to understand all the little details about every approval?'”
Los Angeles-based Motolease plans to implement the program changes in the next “few weeks,” Ucer said.