Auto lending is still slow in the third quarter

Declines in consumer loan demand and a continued pullback from indirect lending programs have resulted in a deceleration of auto loan growth, particularly in new auto loans.

In the third quarter, total vehicle sales in the United States bounced back from a dramatic slowdown induced by COVID-19 in the second quarter of 2020.

According to FRED Economic Data from the Federal Reserve, total auto sales increased from a seasonally adjusted annual rate (SAAR) of 9.1 million in April to 16.7 million as of September. Nationwide quarantines and stay-at-home orders pushed consumers to adopt a more conservative attitude toward debt. Consequently, the overall demand for auto loans, particularly for new vehicles, decreased. Low interest rates helped to partially offset this decline in demand, particularly in used auto lending, which has fueled auto growth in 2020.

Key Points

  • Year-over-year, auto loan balances expanded 1.2% as of Sept. 30, making this the slowest third quarter rate for credit unions since 2011. Used auto loan balances grew 4.4% annually, whereas new auto loans contracted 3.7%. This is partly the result of a spike in used car prices in the third quarter.
  • Total auto loan balances neared $383.0 billion. As of Sept. 30, they comprised 32.8% of total loan balances held at credit unions nationwide.

 

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