Polaris Industries Inc. is still seeking a replacement to fill the Capital One Financial Corp. void for revolving credit, but anticipates a lender it’s not currently partnered with to take on the market, Polaris’ Chief Financial Officer Michael Speetzen told Powersports Finance. In the meantime, he said, the financing volume “has been picked up by its other providers.”
While revolving credit makes up a fairly small portion of the manufacturer’s portfolio, “we would like to facilitate providing optionality for our dealers and consumers,” Speetzen said. Revolving credit was the preeminent lending source for Polaris consumers just over five years ago, but has become somewhat of a “niche market,” and “it is an option we’d still like to have in our portfolio,” he added.
Many lenders may not have jumped into the space yet because “revolving credit is whole different animal,” he said. “We’ve found financial providers who are interested, but part of it is making sure they understand the nuances of revolving credit,” Speetzen said. There’s no shortage of interest in the space, but “it’s a higher risk area for a lender, and it’s a lot more work they have to do to get comfortable.”
Revolving credit is unsecured, meaning “it’s a credit card people are using to buy units and other bolt-on accessories and F&I products, so just understanding the default rates and credit profiles” are different than a traditional monthly installment lending model, he said. Financial providers have to understand the market before they can launch a program, and “how they administer it and go through the approval process — it’s a lot of work behind the scenes,” Speetzen added.
Medina, Minn.-based Polaris currently has installment retail credit arrangements with FreedomRoad Financial, Sheffield Financial, and Synchrony Financial, and an inventory financing arrangement with Commercial Distribution Finance.