ThunderRoad Alters Slingshot Underwriting Amid Rising Losses

571f92f6b5496ThunderRoad Financial is taking a more “conservative” approach to financing Slingshot vehicles, due to higher losses — double — than other powersports vehicles in its portfolio, said President and Chief Executive Donal Hummer Jr.

“We haven’t pulled back from financing them, but we are being conservative on how we are looking at them based on what we have seen so far,” Hummer told Powersports Finance. “Because if the product does not perform as well as some other product, there are ways you can underwrite and put a good deal together that would still make this a reasonable powersports product to finance,” he said, such as requiring higher down payments or lower LTVs.

The rising losses could be attributable to various factors, Hummer said, including the vehicle’s recent recall. Polaris Industries Inc. issued three recalls in early November, affecting its 2015 through 2017 model-year Slingshot vehicles, according to a press release.

“When you start having a lot of recalls, especially if the customer is on a ‘do not ride or use’ recommendation, it definitely affects your delinquencies on those accounts because [consumers] can’t use it,” Hummer said. “They feel they don’t have to pay for it, so that is a big concern, which we watch very carefully.”

Additionally, Slingshots are larger units than a motorcycle or an ATV, for example, so the repossession transportation costs can go up and contribute to the overall profitability on that loan, Hummer added.

When consumers turn in the vehicle or stop paying for them, it almost seems like it was a “bucket list” purchase or the consumer has buyer’s remorse, Hummer said. “We are seeing that more with this type of product, than with regular cruiser or touring motorcycle,” he added.

However, because Slingshots are still relatively new and ThunderRoad Financial has only been financing them for a few years, it’s too early to tell how the vehicles will trend going into 2017, he said. “But early indicators are that it’s something we need to watch,” Hummer added.

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