LAS VEGAS — As competition in powersports finance heightens, some lenders are extending terms mirroring a trend in auto finance, Brian Landau, senior vice president and automotive business lead at TransUnion, said during a presentation at PowerSports Finance 2017, however many powersports lenders remain cautious about 84-month terms.
“On the loan side, lenders are trying to make the monthly payment more digestible for consumer — because just like in motorcycles, auto is where a lot of younger consumers are thinking about monthly payment and using payment as a reference point for what they can buy,” he said. “Interest rates have been at an all-time low, slowly rising, but given the size of the asset relative to a home loan or mortgage, they are not going to necessarily move the needle that much with regards to monthly payment. So term is really the big lever for a lot of finance companies. [Loan terms] typically used to be 60 months, now you are seeing 72 to 84 months.”
Loan terms in auto finance have reached a high of 69.3 months in June, up 6.8% from five years ago, according to Edmunds.com data.
American Cycle Finance, for example, offers 18- to 84-month loan terms. However, 84-month loans are strategic for the company and only for new Harley-Davidson motorcycles, Ben Donnarumma, managing director of American Cycle Finance, said during a panel discussion.
Dealer Direct is willing to go up to 84-months for an “expensive” side-by-side vehicle, for example, Jon Vestal, the lender’s national sales director, said during a separate panel discussion. However, “we don’t like to do that,” he said, adding that 60 months is the preferred cap on loan terms.
“There is a lot more competition than the last few years in motorcycles and powersports, and you are seeing lenders do what they can to offer — within reason, of course — more affordable monthly payments to their consumers,” Landau said.
