Advertisements are popping up everywhere offering a slew of low retail financing rates. Many manufacturers are trying not only to attract customers to their product, but also to their financing plans — some of which are lower than recession-era offers. It’s no longer rare to see APRs of 3.99, 2.99, 1.99 or even 0.99 percent from OEMs.
The economy has settled somewhat, allowing lenders to offer buyers deals that breathe new life into many dealerships. Yamaha is offering lower rates than it did in 2010; Husqvarna is including new terms, and Honda and Arctic Cat are also keeping in step with the competitive rates of the industry.
“If you’re not competitive, you shouldn’t be in the industry,” explained John Tranby, director of marketing for Arctic Cat. “You have to be. That’s the price of entry.”
Husqvarna has undergone some major changes this year with its financing. With BMW’s recommitment to the brand and a new leadership team added this past winter, BMW Financing was introduced, changing rates and terms for Husky customers. The latest offering, running June through August, is 3.99 percent on current models and 0.99 percent on noncurrents.
“We will lend to someone with a 601 credit score or better,” said Kris Odwarka, president of Husqvarna Motorcycles North America LLC. “We will give them the same interest rate that a person with an 800 score gets; we will loan to that person for 60 months, just like the person with a 800 scores gets, and we will loan for 100 percent of the MSRP.”
Husky customers with credit scores of 700 or better will also have the opportunity to borrow 130 percent of MSRP to accommodate for PG&A sales.
Because off-road motorcycles don’t hold their value the same as on-road models, BMW Financing uses its program more like a credit card, rather than gauging the value of the bike. With BMW Motorcycles, Husqvarna’s sister manufacturer, an additional plan is offered that allows for borrowers to have smaller monthly payments with a larger balloon payment at the end of a three-year loan.
“BMW can gauge better what the on-road value of the motorcycle is going to be, so they can base that balloon value on the value of the motorcycle,” Odwarka explained. “On the dirt bike side, we just can’t take that risk because the dirt bike is going to be used so differently.”
Husqvarna dealers can also add 1 percent to a loan rate for their own profit. A 1 percent increase would on average equate to $2-3 more per month per bike for a customer.
“If they can make $100 or $200 [per bike] on financing, that’s helpful for the dealer — really helpful,” Odwarka said.
Yamaha’s most recently offered starting APR was 3.99 percent. The rates across all three credit tiers have been lower this year than in 2010, said Bob Starr, general manager of national corporate communications for Yamaha’s Motorsports Group.
The rates, which are advertised in a variety of manners by the OEMs, draw traffic into dealerships.
“Obviously retail finance programs are good for us because they can help make units more affordable,” Starr said.
Yamaha, along with Husqvarna, has seen higher approval rates as of late. Starr expects this to be a trend industry-wide.
“Reports indicate that approval rates are up in many consumer-related industries, and our industry is no different,” he said.
Arctic Cat’s approvals have remained steady as its current Ride Into Spring program offers 3.9 percent financing for 36 months or 7.9 percent for 60 months. The promotion began Jan. 1 and runs through the end of June.
“We work with Sheffield Financial, and we have for many years, and when they have the ability to offer us better rates, they certainly do,” Tranby said. “And from a promotional standpoint, we’ll buy the rate down.”
Using rebate dollars, Arctic Cat is able to slice the APR to help dealers and customers.
“We’ve got a little more attractive rates [compared to last year]. It’s not huge,” Tranby said.
Noncurrent Arctic Cats also have rebates tied to them, on top of the financing deal.
American Honda says it has maintained competitive retail finance rates, even through the recession. Its current deals start at 1.99 percent APR, while rates as low as 0.99 percent have been offered in the past year.
“American Honda has provided low APR subsidized rates through Honda Finance for customers consistently over the past decade,” said Dan Wright, senior manager of motorcycle field sales for American Honda. “I don’t recall a time that we have not had low rate offers on some models or categories in recent history. We know customers are looking for both low payments and low rates, so we respond to dealer feedback and field reports to determine which is more important and where to place the focus.”
Honda’s rates, he says, give customers confidence, help dealers keep financing in-house and allow dealers to promote the special offers.