With fewer people qualifying for loans (and fewer sales, period), there’s also been a shift toward cash deals. San Diego’s House of Motorcycles, for example, tells us that about half its sales are now cash, whereas last summer a little more than two-thirds of deals were financed.
Fewer Lenders, Other Lenders
Some lenders are leaving the powersports market. A manager at Rick Fairless’ Strokers Dallas says that Bank of America and Wells Fargo will no longer finance the store’s American iron.
Other lenders are staying, but they’re pulling back. Many dealers — franchised and independent — have made good use of GE Money’s FUNancing credit cards and installment loans. But most of these dealers lost the programs Nov. 1. The financing giant has allowed only stores with certain franchises to keep the programs. (Click here for details.)
HSBC many months ago cancelled its own dealer-direct program, Rev Charger XL. Dealers say, however, that the manufacturers squashed the program years ago. “HSBC had a credit card program that was second to none,” says Heidi Byers of RideNow. “Every dealership in the country used the Rev Charger revolving. Then HSBC brought back Suzuki, and Suzuki really became the good card. Then they came out with some outrageous rates on the Polaris card. So Rev Charger was kind of left in the dust with a noncompete.”
As the usual lenders pull back or make their exit, others will no doubt fill in the slack. Says Bill Shenk of his 20 groups: “Money has dried up in a lot of sources, but guys are finding other sources. I’ve already heard rumblings of a couple of new sources that were auto sources that are looking at powersports.”
In an earlier story we reported on how XpressCredit is acting as a portal to thousands of automotive lenders that may someday choose to enter our market.
Several dealers also tell us they’re making greater use of the Drive Card offered by automotive lender Drive Financial — even though the firm charges a 26.99 percent discount fee.
And then there are the aforesaid credit unions and the discount lenders. Dealernews columnist Steve Zarwell wrote about discount lender Help Me Ride in our October issue. Dealers tell us that it charges about a 15 percent discount fee. See Zarwell’s column for a short list of other subprime lenders.
Speaking of Zarwell, in reference to the credit crisis within the industry, he says, “Not in my lifetime have I seen it worse.” Even subprime lenders are raising their standards. The finance manager at San Diego’s House of Motorcycles, for example, says he no longer bothers to send anything under 575 to his discount lenders.
And again, nontraditional lenders take more work. Another problem: Unlike captive finance programs, they require full insurance, which is especially troublesome for young people shopping for a sportbike.
Back-End Sales and Changing Approval Amounts
Besides vehicle sales, the credit crunch has also affected add-on sales like accessories and F&I products. (Continued)