CUs See Slight Uptick after Retrenching in Auto Loans

New cars on dealership lot

Total U.S. lender auto loan-and-lease balances (combined) have continued to hover in record territory over the past 12 months and hit $1.23 trillion in fourth-quarter 2019.

Delinquency trends remained stable, and banks and finance companies increased their market share over credit unions and other lenders. Credit unions were retrenching for most of 2019, but a portion of that slowdown was offset by an uptick in the industry in the fourth quarter.

That’s according to Experian’s fourth-quarter 2019 "State of the Automotive Finance Market" report. You can also click here to view the entire webinar presentation hosted by Melinda Zabritski, senior director of automotive financial solutions for Experian.

The quarterly report gives credit unions insight into the latest year-over-year trends (fourth quarter 2018 to fourth quarter 2019) in auto lending, borrower credit, market share and other analysis. It compares credit unions to banks, captive financing, finance companies, and buy-here-pay-here lenders.

Just a few of the year-over-year highlights include the following:

  • U.S. credit unions' outstanding combined auto loan balances remained the second largest ($346 billion) of all four sub-categories in auto finance. Banks were No. 1 ($368 billion); auto-dealer captive finance was No. 3 ($262 billion); and finance companies were No. 4 ($201 billion).
  • 30-day delinquency rates for auto loans and leases decreased for most U.S. lenders, with credit unions having the smallest rate at 1.28 percent (banks were 1.94 percent, auto-dealer captive financiers were 2.26 percent, and finance companies were 4.25 percent). Delinquency rates either decreased or remained the same for all lenders except finance companies.
  • Credit unions' market share of total U.S. auto financing dropped from 21.3 to 19.9 percent, while auto-dealer captive financiers' share fell from 30.6 to 29.8 percent and buy-here-pay-here entities' share dropped from 6.1 to 5.7 percent. The top financier category that actually grew was banks (from 30.7 to 32.7 percent) and finance companies were second (11.2 to 11.9 percent).
  • Outstanding used auto loan financing balances to U.S. "prime" credit consumers (for all lenders combined) surpassed 50 percent for the first time since fourth quarter of 2009. This is "super prime" and "prime" combined, while the other 50 percent was made up of non-prime, sub-prime, and deeep sub-prime.
  • Much more…

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