Survey Shows Sound RV Lenders’ Portfolios
The Recreation Vehicle Industry Association’s (RVIA) newly released “2005 RVIA Survey of Lenders’ Experiences” reveals that the dollar volume for both wholesale and retail indirect loans remains strong.
Large lenders reported outstanding retail portfolios at year-end 2005 exceeding $19 billion, or 42% greater than a year earlier.
Further, the RV loan delinquency rate for new and used units was less than 1% and continued to be among the lowest among consumer loans tracked by the American Bankers Association.
The survey, released by the RV and finance communities, concentrated on the largest lenders in each category which together represent approximately 80% of national RV lending activity.
Among these large lenders, the retail indirect respondents average 24 years of experience and the wholesale portfolio respondents average 29 years of experience.
Some highlights of the wholesale portfolios:
• The dollar volume of RV wholesale loans made in 2005 was $8.39 billion.
• Dollars outstanding as of Dec. 31, 2005, totaled $3.72 billion.
• The annualized RV inventory portfolio turns per year was 2.17 and the average unit value finance was $40,097.
• The used portion of the average wholesale portfolio was 4.3%; the rental portion was 0.9%.
• Almost all units (97%) were covered by a Manufacturer Repurchase Agreement.
• None of the responding lenders retain the Certificate of Origin until paid.
• Lenders averaged 9.2 inspections and verifications of floorplanned units per year.
• 50% of those inspections are performed by in-house personnel, 17% are performed by external service companies and 33% are performed by both.
• All firms financed 100% of the manufacturer’s invoice.
• The average large wholesale institution had 345 dealerships in its portfolio, and more than half of those dealerships had year-end outstanding of less than $1 million.
• Just over 9% of the inventory was aged beyond 365 days.
Some highlights of the retail indirect portfolios:
• The number of retail indirect loans made in 2005 by the large lenders responding to the survey was 154,300, and the total dollar funded was $6.87 billion.
• The number of retail indirect installment accounts outstanding was 487,200 and the total dollars outstanding was $19.01 billion.
• The average retail down-payment was 12%.
• 70% of the loans were made for new units and 30% were used for used units.
• The average age of used units financed was 38 months.
• The average time on the books for loans for towables was 46 months; for motorized units it was 62 months.
• The average paid-off retail loan for towables was $18,900 and for motorized units it was $66,000.
• The reported RV delinquency rate for retail indirect portfolios was 0.71%, with repossessions initiated after an average of 71 days of delinquency.
• The average percentage of dollars recovered when selling a repossessed unit was 57%, and the annual net charge-off of RV loans to year-end RV loans outstanding was 1.67%.
• Repossessed units are marketed primarily through auto auctions (100%), RV-specific auctions (70%) and consignment (30%).
• None of the lenders reported using private sale, sealed bids or classified ads even though these additional means of marketing repossessed units have been reported in prior years.
• The average maximum maturity was 240 months for both new and used RVs.
• The average minimum amount financed was $50,000 for both new and used RVs.
• The minimum down payment was 10% for both new and used RVs.
• Additional items financed included extended warranties (100%), tax and license (90%), credit life (90%), disability (80%) and physical damage (20%). The average maximum amount of additional items financed was 13%.
• Loan values for new units were determined by manufacturer’s invoice (100%), guide books (60%), bill of sale (40%) and physical inspection (30%).
• For used RVs the loan values were determined by guide books (100%), bill of sale (40%), physical inspection (40%) and manufacturer’s invoice (20%).
• 80% of the lenders had an Internet site and 40% accepted Internet applications.
“By documenting the strength of the RV lending market and the tremendous profitability and stability of RV loans, the 2005 Survey of lenders’ Experiences is a great tool to recruit new banks and financial institutions to the industry,” wrote Robert l. Parish, vice president and national accounts manager for GE Commercial Finance and chairman of the RVIA’s Financial Services Committee.