Credit unions continue to lose auto loan shares

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Experian data shows that first-quarter borrowers took out auto loans for larger amounts, longer terms, and less often from credit unions.

Credit unions issued 20% of the number of loans in the three months ending March 31, compared to 20.8% for all of 2020, 21.9% in 2019 and a peak of 24.5% in 2018. Banks, captives and other lenders increased their share from 2020 in the first quarter.

The Experian report bolsters data released earlier this month by the Fed and CUNA showing auto loan portfolios grew just 0.4% to $ 383 billion in credit unions over from the 12 months ending March 31, but were up 6.1% to $ 847 billion from other lenders.

As a result, the 31% portfolio share of credit unions in March was down from 32.2% in March 2020, 31.5% in December 2020, and its all-time high of 32.6% in December 2018.

Melinda Zabritski, senior director of automotive financial solutions at Experian, presented Experian’s report on the state of the automotive financial market in the first quarter during a webinar on Thursday, measuring credit unions against other lenders by several measures.

Zabritsky said she had no explanation for the decline in credit union shares since 2018, which she called “the year of the credit union.” However, she said, when the banks retreated three years ago, executives said the pullout was intentional.

Melinda Zabritsky Melinda Zabritsky

The overall picture of the market in the first quarter is one where loans were up as sales continued to recover. Borrowers at all levels had healthier credit scores, which resulted in smaller loan portions in the subprime and non-prime segments, where scores are 660 or less.

Many blue chip borrowers had turned to the used car market from 2019 due to the high prices and shortage of new cars they wanted. This has led to higher prices on used cars.

Cox Automotive reported Thursday that average list prices for used cars in April were around $ 22,568, up 16% from the previous year and 15% from two years earlier.

The rolling 30-day used vehicle sales rate was approximately 2 million to 2.1 million in April, exceeding sales levels for the same weeks of 2019. As of April 26, sales were 92% higher than the previous year and 6% higher than the same week of 2019.

The average Manufacturer’s Suggested Retail Price (MSRP) for new cars was $ 41,950 in April, up 8% from September.

Experian found that 43.2% of loans and rentals were for new cars in the first quarter, up from 40.9% for 2020 as a whole.

“We’re starting to see these major consumers coming back to new cars,” she said.

Credit unions don’t get as much love as other lenders.

Captives increased their start-ups in the first quarter by 23.9%, while they fell 1.39% for credit unions, 0.98 for banks and 5.61% for financial companies and others. This follows a 12.5% ​​drop for credit unions from 2019 to 2020.

Credit unions had their highest shares of loans and rentals in the first quarter in the West (23.4%) and Midwest (20.6%), and their lowest shares in the South (16 , 1%) and the North-East (12.2).

Credit unions have a slightly higher proportion of blue chip borrowers than banks, and significantly more than captive lenders. Borrowers with ratings of 661 and above accounted for 74.4% of first-quarter originations with credit unions, compared to 70.6% in the first quarters of 2020 and 2019.

Blue-chip borrowers have similarly increased in banks, but have fallen from 68.84% in 2020 to 67.59% in 2021 among captives. Among captives, blue chip borrowers lost almost a percentage point to 67.6% in the first quarter.

The over 60-day default rate for all lenders was 0.53% as of April 25, down from about 0.70% to 0.75% two years ago and from 0.85% to 0 , 90% a year ago.

The average amount financed for new cars by credit unions was $ 38,387 in the first quarter, compared to $ 37,016 last year and $ 34,537 in 2019. Average payments fell from $ 555 in 2019 to 575 $ in 2020 and $ 591 in the first quarter.

On new cars, terms of 73 to 84 months represented 32.3% of new car loans in the first quarter, compared to 30.8% last year and 30.5% in 2019. Terms greater than 84 months represented 2 , 5% of loans in the first quarter. , compared to 2.2% in 2020 and 1.4% in 2019.

On used cars, terms of 73 to 84 months represent 23.4% of loans in the first quarter, against 19.8% in 2020 and 18.9% in 2019. Terms of over 84 months represent 0, 7% of used car loans in the first quarter, compared to 0.4% in 2020 and 2019.

Terms tend to be longer in credit unions.

Terms of 73 to 84 months represented 26.4% of used auto loans from credit unions in the first quarter, up from 24.1% in 2020 and 21.7% in 2019. The 84-month terms were 1.0. 2%, compared to 0.8% in 2020 and 2019.

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