Independent Banker - July 2024 - 63

Guest Experts:
Lending
Confidently Explore Recreational and
Commercial Vehicle Lending Opportunities
Challenge/Solution: Entering new lending markets can be daunting if financing exceeds your bank's typical limits, potentially
deterring you from profitable opportunities. However, recreational and commercial vehicle lending spans a wide range of costs.
Partnering directly with dealerships and setting clear loan requirements can safeguard your business from risky loans and prevent
overextended financing capabilities.
Community banks often face significant hurdles when entering
the recreational and commercial vehicle lending markets,
which include RVs, boats, powersports, golf carts, trailers, and
more. However, with the right strategies and understanding,
these challenges can be transformed into opportunities for the
growth and diversification of your business. Here's a look at
some common concerns and how to address them.
1. Tackling Competition From National Lenders
It's true that national lenders have extensive resources, but
community banks hold a unique advantage: deep-rooted
relationships and trust within their local communities. These
relationships grant you the ability to provide personalized
experiences and more one-on-one service. This local focus
allows you to provide a tailored and responsive lending
experience, which can be highly appealing to customers
looking for a more personal touch.
2. Automating the Lending Process
Manual workflows slow down the lending process, but
automation offers a solution. Implementing tools that help
manage documentation significantly reduces funding exceptions
and increases efficiency. Automated workflows not only speed
up the lending process but also improve accuracy, making the
experience smoother for you and your customers.
3. Overcoming Expansion Uncertainty
Sometimes the perceived loan costs in recreational and
commercial vehicle markets can feel overwhelming. Loans
often range from $10,000 to $10 million, and with the additional
fluctuation in rates, terms, and customer credit qualifications, these
loans can surpass your resources. However, rather than seeing the
range as a deterrence, focus on the loan sizes and customer credit
ranges within your comfort zone, mitigating risk. You don't need
to extend beyond your capabilities to be successful in this sector.
In fact, you can uncover new revenue streams and enhance your
service offerings.
4. Managing Dealer Relationships
There's a misconception that a large sales force is necessary
to manage a recreational lending program. In reality, you can
selectively do business with dealers or dealer groups you already
have relationships with. This selective approach allows you to
manage and control your expansion into the recreational lending
market with whatever size sales force you employ.
Conclusion
Recreational and commercial vehicle lending presents a promising
opportunity for your community bank to diversify its portfolios
and increase revenue. By addressing concerns about competition,
workflow efficiency, loan dynamics, and dealer relationships,
you can successfully navigate and thrive in this lucrative sector.
Embracing automation and leveraging existing dealer relationships
will also pave the way for sustainable growth and diversification.
Chet Heughan, Senior Sales Director, AppOne®
CHeughan@AppOne.net
| (225) 236-8476

Independent Banker - July 2024

Table of Contents for the Digital Edition of Independent Banker - July 2024