Auto-style leasing for top-tier customers

HorsePower Financial develops from retired Harley-Davidson dealer’s frustration

When Ray Phipps was a Bar & Shield Award-winning Harley-Davidson dealer, one thing really frustrated him — his top-tier, high FICO score customers were losing money each time they upgraded to a newer motorcycle.

Through his role as chairman of the Harley-Davidson Performance Consulting Group and other interactions with fellow dealers, Phipps discovered he wasn’t the only one feeling this frustration.

“We did not have a financial tool that was attractive to high-plateau, high-dollar, preferred customers,” he explained. “We all agreed that we really needed a financial product that was directed at the upper tier of buyers.”

Around 2004-05, Phipps began putting a solution into serious consideration. After his 2007 retirement from the dealership, Phipps partnered with some automotive finance experts, and by mid-2008, he began crafting HorsePower Financial.

Auto-style lease

HorsePower Financial is different than most other powersports lease providers and similar to automotive lease providers in that its products are targeted at top-tier pre-owned Harley-Davidson buyers with FICO scores of about 650 and higher.

Phipps targeted these buyers because they often have no problem writing a check for a new bike, but they want to be able to upgrade to a newer model within a couple years without being dinged financially.

“In a LifeStyle Lease, you only pay for the part of the motorcycle you use, which helps the riders’ debt-to-income ratio,” explained Vic Perz, director of marketing for HorsePower Financial. 

With its LifeStyle Lease, HorsePower Financial offers customers a lower monthly payment and a lower down payment than a traditional long-term loan. Loan terms range from 12-48 months, which is shorter than the 60-84 months traditional loans often offer. The shorter term gives dealers a chance to get their customers onto a newer bike faster.


“With our LifeStyle Lease, riders don’t really have the risk of negative equity. This means our dealers can put those riders onto a newer motorcycle in as little as 12 or 24 months,” Perz said, adding that 60-84-month traditional loans can be a challenge for dealers because they sometimes won’t see those riders again until they’re out from underneath their negative equity.

“For a Harley-Davidson dealer, those high FICO score customers lead to long-term success,” Phipps said, explaining that after the 12-48 months, those customers will be back in the dealership, ready to upgrade.

Though the recession marred credit for many prospective customers, Phipps said there are still plenty of high FICO score buyers in the market, ready to buy their next bike. And many of those buyers are financially astute, so they don’t want to lose money purchasing a bike that will depreciate through a traditional loan.

Adding dealers

Since Phipps had been a dealer himself, he was careful to build his team of key employees with only former Harley-Davidson dealership employees.

“We work with Harley-Davidson professionals because we are Harley-Davidson professionals,” he said.

HorsePower Financial LifeStyle Leases are available only on pre-owned Harley-Davidson motorcycles sold by franchise or independent dealers. Currently the services are available in 18 states, but more are being added as dealers reach out to HorsePower Financial.

“We’re constantly growing, and we respond to dealer demand,” Phipps reported.

HorsePower Financial is looking to work with dealers who are planning for the future, not just those looking to make a quick buck, since the program is designed for customers to return time after time when their lease expires, and they’re ready to step up to their next bike.

“We work best with dealers who are committed to their customers’ business,” Phipps said. “We want them to look long term.”

HorsePower Financial recently partnered with SkyPatrol, a GPS tracking solutions company, to celebrate its dealers with two parties at the Sturgis Buffalo Chip during the 75th annual Sturgis Motorcycle Rally. With free food, beverages and live entertainment from Brantley Gilbert Sunday night and John Fogerty Wednesday night, HorsePower Financial made quite the impression. But Phipps pointed out that traditionally many of its dealer partners have come from referrals from their peers.

“It’s not our style to be the loudest,” he said. “We want to be the best.”

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