Smart Borrower Blog

Credit Unions Ramp Up Auto Lending


Apr 8th, 2015 @ 8:45 PM by Amber Nelson


An improving economy and jobs market is spurring credit unions nationwide to devote more resources to auto loans, according to data from financial information firm Sageworks. The increase means car loan rate will remain competitive among all lenders for buyers in the new few months.

During the third quarter of 2014, U.S. credit unions held a total of $225 billion in new and used car loans, a 16 percent jump from the year before when loans totaled $193 billion and a 30 percent leap from the same quarter of 2012. Two years ago, credit unions total auto loans amounted to just $173 billion.

“All of the factors are sort of working in credit unions’ favor when it comes to auto lending,” said Sageworks analyst Aaron Lenhart. “Economic conditions are improving, and sentiment is following in line. People are feeling good. They see the unemployment number dropping and wages moving up a little bit.”

While credit unions have been increasing their share of lending in several areas like home mortgages, their car loan business has particular interest for customers as they are able to offer very competitive auto loan rates along with their local, personal customer service. “That may be drawing folks in,” Lenhart commented.

Regionally, auto lending among credit unions has grown most in the South over the past two years. From 2012 to 2014, CU auto loans increased there by $21 billion. The West took second place, with auto loans rising by $15 billion. Lending grew by $10 billion over the same period in the Midwest and by just $4.6 billion in the Northeast.

Auto lending in general is growing and booming. The uptick in jobs and wages has encouraged many Americans to buy cars with the new car market selling one million more cars in 2014 that the year before and car loans totals rising to record highs.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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