Company offers retail financing for customers with less than perfect credit
Roadrunner Financial has only been in existence 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 underwriting expertise of those financial institutions, and Roadrunner Financial was born.
After surveying hundreds of dealers, Roadrunner 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 control 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 second 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 customers, its rates are higher than prime lenders, 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 stipulation 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 segment is truly underappreciated. There are millions 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 applicants 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 dealers finance customers with less-than-perfect credit. Our operation was born out of an insight that we had in the market, where customers with less-than-perfect credit were poorly underserved. And it’s because of this that dealers were losing out on a vast amount of sales,” Davidson said.
Among those leading the Roadrunner Financial team are former Capital One and GE Capital employees. “We have some of the biggest brains in the room when it comes to understanding credit, and they know exactly how to write powersports customers, which gives us a tremendous competitive advantage over any of the lenders in this space,” Davidson said.
Those in customer service are focused on taking care of both dealers and their customers. Roadrunner’s team is on hand when dealers are working, meaning they’re just a call away during the week and on Saturdays.
“Our team goes above and beyond to be available to the dealer whenever they’re trying to close a deal,” Davidson said.
Roadrunner’s approach has been noticed by the industry. The company has signed on to be an official partner with Suzuki; Arctic Cat; CFMOTO; Piaggio’s Aprilia, Moto Guzzi and Vespa; Textron’s Bad Boy Off Road and E-Z-GO; Massimo; Bennche; ODES UTVs; and Hyosung. Most recently, BRP’s Can-Am joined forces with Roadrunner to offer its services to Can-Am dealers.
Roadrunner Financial only finances new or unused vehicles from its OEM partners. Dealers who carry those brands simply need to sign up with Roadrunner to be eligible to offer the financing. Then, when a credit application is denied by a prime financing company, dealers can submit it to Roadrunner via the online Octane Lending platform.
With more than a dozen brands on board, over 600 dealers have signed up for Roadrunner’s services.
“The adoption has been tremendous, and we’re proud to help dealers amplify what they do best: move metal,” Davidson said.
Roadrunner Financial is looking to add more OEMs to its roster and add staff in 2017.