Issue link: https://read.dmtmag.com/i/288177
www.BoatingIndustry.com www.BoatingIndustry.com 42 | Boating Industry | April 2014 MARKET FOCUS SECTION { CONSUMER FINA NCING } BY LIZ KEENER C onsumer financing has leveled out. It's great news for consumers try- ing to get loans, dealers and manu- facturers selling units and anyone else in the industry that relies on increased boat sales. Customers with credit scores under 600 are even being financed for smaller boats, and new lenders are entering the market as they see the performance of boat loans returning to pre-recession lev- els. It's a welcome sign for dealers whose biggest snag to closing a deal can be fi- nancing the eager prospect. "The lending situation, compared to the last few years, it's certainly stricter than pre-recession levels, but over the last couple years, it has stabilized," said Scott Ward, vice president of Brunswick Financial Ser- vices and president of Blue Water Finance. LESSONS LEARNED Though lending is heading in a positive direction, it's also evolving. Creditors have learned lessons from the recession and have changed some of the ways they do business. Most are looking harder at cus- tomers' credit profiles and verifying the applicants' information more consistently than was done in the past. "They're verifying information, as far as Consumer financing stabilizes Prime and subprime customers receive loan approvals, though lenders are being more diligent making sure that the buyer is the buyer, and they're making sure the person made how much they said they made, or is employed where they're employed," explained Ni- cole Armstrong, vice president of sales and marketing for Priority One. "A lot of times they would ask for references, but they never would follow through; not anymore, they're checking to make sure that those references are actual references. They're checking to make sure the customer has taken delivery of the unit, that they're going to actually keep it where they're say- ing they're going to keep the unit. They're just doing their due diligence." In addition to a credit score, lenders are looking closely at a customer's work history, residency, second source of repay- ment, liquid assets and credit utilization. For larger boats, they're looking at proof of liquidity, net worth, tax returns, income verification and prior boating experience. Most lenders are also looking at the commitment to a boat, in the form of 10 to 20 percent down, which many customers are willing to make as interest rates for CDs and bank accounts remain low. "I actually tend to think, especially in non-trailerables, there's a trend that they're putting more money down than they used to," said Michael Bryant, president of the National Marine Lenders Association and principal of Trident Funding Corporation. For those who don't have a minimum of 10 percent down, some zero-down options are still available, though they're not as common and not offered by as many lenders. "There are a few lenders who are offer- ing zero down, but the customer must have it all; everything must be in line to qualify," Ward explained. When banks are approving loans, they're studying valuations more closely, another lesson that came from the reces- sion. In the past, many lenders would sim- ply loan out 80 to 90 percent of the sale price as long as guide values were close, in the case of used boats. However, that's how many were burned during the recession. "In a lot of cases, they found that the boat valuation as it related to advancing P42x43-BI14APR-MarketFocus.indd 42 3/13/14 4:46 PM