Outdoorsy’s late September announcement it would move into RV financing primarily targeted consumer refinancing options.
However, the online rental platform has big plans to work with RV dealerships as well.
Company Vice President of Product Anish Bhatt said Outdoorsy was not simply planning to reach out to individual rental owners on its platform to offer financing and refinancing services. The company already began outreach to dealerships looking to gain financing to expand rental fleets, refinance current rental properties and begin discussions to help dealers provide purchase-loan financing options to consumers.
“We are not necessarily just focused on one-owner RV consumers,” Bhatt said.
Bhatt said Outdoorsy sees the lending opportunities as big, particularly with smaller mom-and-pop dealerships. He equated the potential outreach to small-business lending opportunities. Dealers would be able to access financing more easily and with lower rates, enabling faster growth, particularly in the rental space.
“We want to get into looking at the income generated on our platform and how much dealers want to grow,” Bhatt said. “Some dealers are in between purchasing that next vehicle to be able to rent. We would love to see them get enough funding to take advantage of those opportunities when they arise.”
Financing also can fuel faster repairs when rental vehicles are damaged or need servicing and dealer cash flow is tight.
“Sometimes there are costly repairs or maintenance on their vehicles. With cash flow being tight at times, dealers consider delaying those repairs or inspections,” he said. “In the future, we can give dealers the funds to get the RV back on the road to rent again. These are just some of the conversations we are having. Dealers are telling us they want to continue growing their fleet as much as possible.”
Outdoorsy noted its proprietary rental platform data would enable the company, working in conjunction with Lead Bank in Kansas City, Missouri, to offer distinct and unique credit products. Bhatt said the difference came in the information the company could collect on rental users’ income and activity, along with similar trends in the space. Lead Bank then would consider those alternative funding options in its credit decision.
“We write a letter of recommendation within the application to Lead Bank,” Bhatt said. “We can share information that Class C motorhomes based in Southern California are in a market that tends to grow. We can show proof that the consumer has an opportunity to continue growing. We showcase additional income many banks do not look at.”
Lead Bank, in turn, considers the additional information when determining whether to extend credit and at what cost. Bhatt said because Outdoorsy could provide historical and potential income streams with the purchase, Lead Bank offered lower interest rates because the bank considered the loans to be lower risk.
In addition to the purchase lending, Outdoorsy expects to actively target refinances. Bhatt said the company was interested in providing lower interest-rate options but also in shortening loan terms. Currently, the average RV loan term is 10 to 15 years. Outdoorsy wants to offer consumers the ability to shorten loan terms to five to seven years, while not increasing payments, through lower interest refinances.
The industry benefit, Bhatt said, is increased purchasing power when the consumer trades up.
“When they are ready to flip this into a new vehicle, their loan-to-value ratio is not upside down,” Bhatt said. “We want to give them better terms at shorter length.”
Bhatt said the financing launch is timed to meet an RV rental market up “for a land grab.”
“When we looked back at some of the data from our user study, the amount of renter demand continues to come in throughout the company, but especially the West Coast, the Southwest and the South,” he said. “There is so much rental demand it looks like you can never do a good enough job of meeting that demand.”
He said Outdoorsy plans to ensure dealers have the financial tools to expand when the timing is right.
“Any way we can help while dealers are looking to expand, we will,” he said. “Even if, at the end of the day, we are just helping them refinance their purchases and getting more money in their pockets.”
