Kymco USA is maintaining its leasing partnership with Nextep Funding, despite the fact that it remains a small part of the OEM’s business, Bruce Ramsey, vice president of sales and marketing at Kymco, told Powersports Finance.
“Leasing has done OK with a small percentage of our dealers,” he said. “[Nextep’s] caps are really low, in the $3,000 range, so they only handle our entry-level scooter product at this point.”
Lenders typically stick to the lower-cost scooters because the product is considered riskier due to the state registration laws, Ramsey said.
“The smallest scooters — 50 CCs in particular — about half of the states treat them as moped class vehicles and in some cases don’t require registration, don’t require insurance, may not require any financial responsibility by the operator,” he said. “That makes it difficult for lenders to want to carry that product.”
Furthermore, the OEM specializes in off-road vehicles and Ramsey doesn’t think there will “ever be a good option” for leasing those vehicles, similarly because of the registration issue.
“Depending on what state you’re in, you may or may not need registration for an off-road product, and leasing I think lends itself to being able to register and track that vehicle in the event they default on it,” he said. “So [leasing] hasn’t been a huge portion of the business to this point. The vast majority of it is still prime installment loans.”
Kymco this week announced an extension of its floorplan finance partnership with Wells Fargo Commercial Distribution Finance. The manufacturer offers a full range of scooters, small- to mid-sized motorcycles, ATVs, and side-by-sides through retail financing partnerships with Sheffield Financial, Synchrony Financial, Roadrunner Financial, and Nextep Funding.
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