Bank Courts Cruiser Customers with Crappy Credit

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Medallion Bank of Salt Lake City last year started offering vehicle loans to cruiser customers with bad credit. The bank has been loaning money to boat and RV customers for about 10 years, and this year it had a booth at Dealer Expo. According to Medallion's Leah Johnson, about 500 motorcycle dealers have signed up so far, though they haven't been very active.

"We're hoping to get into the full line of powersports by the third quarter or the end of the year," Johnson said. "That would include ATVs, dirtbikes, sportbikes. We're also looking to get into personal watercraft and snowmobiles. So we're easing our way into the powersports arena."

The bank offers services in 45 states, and there are no setup costs. "We don't do Alaska and Hawaii and a couple of states like Louisiana and West Virginia because their collection and repossession laws are so hard that we just haven't pursued going into those states yet," Johnson said. Medallion also doesn't conduct business in Rhode Island.

The bank finances new cruisers and used ones going back 10 years, and there is no limit on engine displacement. Loan amounts range from $5,000 to $40,000. Standard terms are 84 months and 108 months, depending on the amount financed, but the bank will go down to 60 months if the customer requests it. At press time, Medallion offered just one rate: 18.95 percent.

The bank advances up to 120 percent of either the manufacturer's invoice or the NADA wholesale value. At the time of funding dealers are paid 2 percent participation.

If the unit is paid off within the first six months or repossessed within a year, Medallion asks for all or a portion of the participation back, but this seems to be the only recourse to the dealer.

Requirements include income verification, four personal references and a copy of the customer's driver's license. The bank will accept FICO scores as low as 525, but other stipulations apply. Medallion requires a 10 percent down payment and full-coverage insurance.

Dealers can apply for the loans online; applications are denied or accepted by the end of the business day. For dealerships that are still technologically challenged, Medallion also accepts faxed applications — be warned, however, that any faxed application that is accepted incurs a $69 processing fee. — Arlo Redwine