Issue link: http://read.dmtmag.com/i/780450
FINANCIAL Company offers retail financing for customers with less than perfect credit BY LIZ KEENER MANAGING EDITOR Roadrunner Financial has only been in exis- tence for about six months, and yet the second- look consumer financing company is already gaining traction. Roadrunner has partnered with more than a dozen powersports brands, and more than 600 dealers have signed up for its program. Roadrunner Financial was launched last year to help dealers capture customers who aren't approved by prime financing companies. The program was organized by the founders of Octane Lending, a retail financing platform that was featured in Powersports Business in 2014, and a partnership with several financial institutions. Octane Lending recognized a gap in financing below prime and above traditional subprime, but was having difficulty attracting near-prime lenders to the powersports market. To solve this problem, Octane offered financial institutions a turnkey origination solution that combined Octane's technology with the under- writing expertise of those financial institutions, and Roadrunner Financial was born. After surveying hundreds of dealers, Road- runner discovered the primary pain points dealers experienced when dealing with second- look financing companies were: fees charged to the dealer and the customer; not enough con- trol over the financing process; slow approval processes and high interest rates. "Many dealers are leaving sales on the table because of the pain points associated with sec- ond look lending," explained Mark Davidson, EVP of Business Development for Roadrunner. "We saw an opportunity to build a second-look financing program optimized for the unique needs of powersports dealers." To address the dealers' first two concerns, Roadrunner developed a program in which neither dealers nor customers are charged fees. The company also gave dealers full control over the process, with an online application that allows customers to stay in the dealership rather than traveling to a local credit union or somewhere else outside of the store. Third, Roadrunner Financial created a quick approval and closing process. "We can close deals incredibly fast, which is one of the number one needs and number one selling points to dealers," Davidson said, adding that the current company record is 58 minutes from credit application to funding the dealer. Since Roadrunner targets higher risk cus- tomers, its rates are higher than prime lend- ers, but the rates are still lower than the APRs offered by many other second-look financing companies, Davidson reported. "Most, if not all dealers, want an affordable down payment because it's usually one of the No. 1 blocks in getting a deal done," he said. Roadrunner Financial also has a light stipula- tion packet, so customers don't have to provide a barrage of documentation to receive a loan. The ideal customer to send to Roadrunner Financial is one who has a FICO credit score of 580-680, or someone who has a higher score but a blemish on his or her credit report that prevents approval for prime financing. "We estimate about a quarter of all buyers fit into Roadrunner's demographic, Davidson said. "The sheer size of the near-prime seg- ment is truly underappreciated. There are mil- lions of people in the USA who would fit our credit guidelines." On average, Davidson explained, they hear from dealers that about 50 out of 100 appli- cants are not a good fit for the dealer's prime lenders. Of those 50 who are not a good fit, Roadrunner Financial will approve about 25, giving dealers the opportunity to save more sales from walking out their doors. "Roadrunner Financial is a second-look retail lender designed to help powersports deal- ers finance customers with less-than-per- fect credit. Our operation was born out of an insight that we had in the market, where customers with less-than-perfect credit were 8 • February 13, 2017 • Powersports Business www.PowersportsBusiness.com Roadrunner Financial gives customers a second look STOCK MARKET WATCH Stock Price Percent Company Ticker 1/20/17 Change Universal Technical Institute UTI $3.35 15.1% Cycle Ctry Accessories Corp ATC $0.01 12.0% ArvinMeritor ARM $13.78 11.0% Dover Corporation DOV $79.02 5.5% Polaris Industries, Inc. PII $86.32 4.8% Honda Motor Corp. ADR HMC $30.44 4.3% TCF Financial Corporation TCB $18.53 -5.4% Marine Max, Inc. HZO $18.00 -7.0% Cooper Tire & Rubber CTB $35.10 -9.7% Arctic Cat, Inc. ACAT $13.15 -12.5% Spy Inc. XSPY $0.05 -20.6% POWERSPORTS BUSINESS WINNERS AND LOSERS See Roadrunner, Page 10 MARKET WATCH Change 1/20/17 from 12/30 % Change Powersports Business Index 252.120 3.91 1.57% Dow Jones Index 172.454 0.56 0.33% S&P 500 Index 156.589 2.01 1.32% Source: Wells Fargo Securities LLC 0 50 100 150 200 250 300 5/20/16 6/17/16 7/22/16 8/12/16 9/9/16 10/14/16 11/7/16 12/2/16 12/30/16 1/20/17 PSB INDEXED VALUE DOW JONES INDEXED S&P 500 INDEXED STOCK MARKET ACTIVITY DEALER FINANCIAL SNAPSHOT DECEMBER 2016 Same Store Sales from 1,610 CDK Lightspeed deal- ers were up 6.2 overall in December 2016 vs. the same period in 2015. Parts, major units and service each increased overall by more than 3 percent, with major units increasing 7.2 percent. Both the North- west and Midwest saw increased sales in each of the four categories. The Midwest saw the largest change, with a 23.2 percent increase overall. PARTS SALES Parts saw 759 dealers up and 851 dealers down. SERVICE SALES 873 dealers were up in service, while 716 were down. MAJOR UNIT SALES In major units, 787 dealers were up and 673 were down. NORTHWEST 2.1% Parts Department 6.6% Service Department 11.3% Major Units 9.5% Overall MIDWEST 22.4% Parts Department 10.3% Service Department 26.6% Major Units 23.2% Overall NORTHEAST 4.8% Parts Department 1.2% Service Department -3.7% Major Units -2.0% Overall SOUTH -6.8% Parts Department 4.0% Service Department -0.7% Major Units -1.0% Overall WEST -0.2% Parts Department 7.8% Service Department 12.2% Major Units 9.0% Overall UNITED STATES 3.8% Parts Department 6.0% Service Department 7.2% Major Units 6.2% Overall FOR MORE ON THE SAME STORE SALES DATA For more information on this report and other industry data, contact: cdkrecreation.com/dataservices