Auto loan and collection challenges in 2021
While vaccination rates are on the rise and cities begin to reopen, the credit union industry is still pivoting to respond to pandemic-driven economic issues. Though auto loan delinquencies have remained low, lender accommodations as well as government stimulus payments may be masking the true economic impact. Moderate increases in auto loan delinquencies are expected this year as federal programs wane and lenders rescind accommodations.
Here are 4 economic impacts to consider:
- Unemployment: Currently, the unemployment rate stands around 6.1%. This has decreased significantly from the 7.9% rate in Q3 2020, but is still higher than the pre-pandemic rate of 3.5%. Economic volatility is expected to continue through 2021; but there are some positive signifiers such as lenders’ continued reduction of loan loss reserves, indicating an increase in confidence regarding consumers’ financial stability.
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