Westlake Financial Services is eyeing expansion for its powersports portfolio this year, from adding new dealers to the network, to launching e-contracting, according to David Goff, the lender’s assistant vice president of marketing.
Westlake will roll out e-contracting to powersports dealers this year, shortly after the nationwide expansion of e-contracting to auto dealers — which is slated to happen by midyear, Goff told Powersports Finance.
The Los Angeles-based lender is also looking to expand the portfolio by “buying more paper,” but not by buying deeper in the credit band, he added. “You are seeing more and more lenders, and with Westlake we still see it [competition] as an opportunity to grow, but we have to grow right,” Goff said. “We have to buy the right deals at the right structures, and it makes sense for both the dealers and us.”
Powersports Finance spoke with Goff about Westlake’s plans for expansion, regulatory pressure, and how the company monitors rising losses and delinquencies. The following are edited experts from the interview.
PF: How much more regulatory pressure are you feeling this year, versus last year?
DG: We do our full due diligence on everything we do, regardless of the product [segment]. We try to make sure we are fully compliant based on local, state, and national regulations throughout the year. For us, the regulation and crackdown for 2017 doesn’t seem to be overly pressurized for us. It’s just something we know we have to do and be compliant on. I could see the powersports industry is kind of like a hierarchy — [the Consumer Financial Protection Bureau] started with [regulating] the housing market, then auto finance, and now it will roll into powersports. I do think you will see more and more lenders be scrutinized a little bit. In general, you have to make sure you are compliant across the board — everything from titles, to how we lend, to the way we write paper, to working with dealerships. I think all of that is important.
PF: How impacted is Westlake with regards to rising losses and delinquencies in powersports?
DG: Losses are going up. Are we impacted? Yeah, we are impacted, but that just means we have to buy smarter as we go forward. We are looking at our current portfolio, and where we think it needs to go, in relation to what we think is going to happen in 2017. We will continue make changes to make sure we are buying smarter in 2017, so that means if we see losses spiking in a certain segment in our portfolio, we will make adjustments to require more down payment or a higher dealer fee to buy that paper.
PF: How can the dealer help?
DG: A lender can’t survive with high losses: bottom line. That’s why lender’s go out of business — because losses get too high [to manage]. Hence the partnership side of things between a dealer and lender. A dealer is the front eyes; they are the ones that are seeing things from [a consumer] level. Through conversation with a customer, the dealers know if this customer [will end up] having the bike repossessed or will not pay their loans. These are things we look for from the dealer side to really build that partnership. They are the first step to cutting back losses. Their education to the customer about why it’s important to make payments, helps the lender down the road — reinforce these facts.
It’s also the lender’s job to buy a portfolio or buy a series of deals that fits in line with where they need to be, as far as losses and delinquencies. So it’s our job to constantly maintain and monitor the portfolio to make sure we are buying the right paper. If that means we have to charge higher down payments, adjust interest rates, or charge higher dealer fees to the customers, then that’s what we need to do to make sure we are buying the right portfolio.