Powersports finance has been fairly chaotic since summer 2008. Dealers report a shift toward revolving loans as installment
underwriters change and OEMs attempt to attract more foot traffic with low monthly payments. But dealers also are turning
toward credit unions. Plus, Sheffield Financial has structured its revolving programs to act as installment loans. We spoke
with the company's CEO about this and the market in general. His comments were so encompassing that they take up the majority
of this report. Also check out stories on another growing lender, a new "buy here, pay there" program, and our online collection
of lender profiles.
Jack Snow, CEO of Sheffield Financial.
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Over the past seven months, Sheffield Financial has become something of a savior to some dealers. Multiline stores report
that after rocky starts, the new programs for BRP, Kawasaki, Polaris and Suzuki (not to mention the programs already in place
for Arctic Cat, KYMCO and the Piaggio Group) are buying better than most others. And this is just the beginning. Sheffield
CEO Jack Snow says he plans to expand until Sheffield is the industry's principal lender.
Snow may have perfect timing: Unlike some lenders, Sheffield not only preaches responsibility but has built it into all its
programs, even its revolving ones. Federal laws that will radically alter traditional revolving programs — laws making up
the so-called credit card consumers' Bill of Rights — go live early next year. Snow says Sheffield will benefit because it
already complies with most of the regulations.
Also refreshing is Snow's willingness to talk. During his interview with us, Show was surprisingly candid. Speaking in a hearty
Southern drawl (the company's based in North Carolina) and repeatedly calling us "sir," he didn't hesitate to answer a single
question. He addressed dealer complaints, as well as company policies on things such as loan participation, used-bike financing,
full-coverage insurance and the company's eagerness to rehash deals. A LEARNING CURVE
Sheffield headquarters in Winston-Salem, N.C. A Western office may be coming in 12 to 14 months.
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Snow's wife, Bonnie, founded Sheffield Financial in 1992, and he joined the venture a couple of months later. They started
with lawn mower financing. About five years ago Sheffield entered the powersports industry by signing a contract with Arctic
Cat. Although the Piaggio Group brands followed two or three years later, it was only this year that Sheffield began to finance
motorcycles in volume. Snow admits that his company has had a lot to learn.
Dealers have noticed. One finance manager says that of the more than 50 applications he initially sent to Sheffield, it only
approved two. He and managers at other stores wrote letters saying that if things didn't change, they would cancel the programs.
"We didn't know the motorcycle market," Snow admits. "We were overly cautious." In April he instructed his underwriters to
pass along all declined applications to their supervisor. "That's when our world changed for the better with the dealers."
Sheffield uses credit scores only to establish pricing. Approvals are based primarily on the customer's background information.
Good thing, too: Snow says that since November 2008 and every month since then, more than 50 percent of applicants have been
subprime (having a score of 660 or less). Sheffield has denied the majority of these apps, but it's also bought a significant
portion. "I can tell you we've financed some 600s and 580s," Snow says. "I looked at one this morning. He scored in the 400s
— and that's rare — but he had 13 loans with us and paid us like clockwork. So I can't walk away from that customer."
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Posted 2009-09-14 22:54:12.0
