Member confidence drives auto loan growth: CUNA Mutual
A combination of increasing consumer confidence and less-aggressive financing incentives from manufacturers continue to help credit unions grow their vehicle loan portfolios.
According to CUNA Mutual Group’s October Credit Union Trends Report, at $197 billion, credit union-held member vehicle loans were up 19% from their low point in March 2011 and were up 10.8% during the past 12 months. The report tracked data through August.
A combination of factors is propelling this remarkable reversal of trend, wrote Dave Colby, CUNA Mutual chief economist, in the report.
The drivers include improved consumer sentiment and the increasing need to replace an aging vehicle fleet, with the average age being 11.2 years, according to industry tracker R.L. Polk. Other factors include less- aggressive financing incentives from manufacturers and home equity loan rates that are higher than vehicle loan rates, Colby said.
Used vehicle loans were at an all-time high and the 10.2% gain accounted for 30% of all credit union loan growth since August 2012, the data showed. New vehicle loans were up 8.2% year-to-date and 11.9% year-over-year. This portfolio accounted for 19% of all credit union loan growth during the past year despite equaling just 10.8% of all loans.continue reading »