LAS VEGAS — Texas Dow Employees Credit Union could consider a lease program for powersports, as leasing becomes a more “viable product” in the space, said Chuck Smith, the credit union’s senior vice president and chief lending officer.
Powersports vehicles are typically considered a luxury purchase or toy, which is why many consumers look for affordable monthly payments, which a lease can provide, he told attendees at PowerSports Finance 2016.
Leasing seems to be a good opportunity for lenders, particularly “with the values being so low,” Smith said. In regards to residual values, the lender is not required to get insurance on the product “if we are under 25% residual value,” he added.
For example, “if you put 25% of that vehicle’s value at the end [of the lease term], then do a normal type of 48- or 60-month lease, then that would make it even more affordable.” If most consumers buy the powersports vehicle at the end of the lease term, “then you don’t even really have to dispose of any of the motorcycles, which sounds intriguing,” he added.
Maybe TDECU “will become competition” to the leasing providers in the space soon, Smith hinted.