Credit unions continue to lose share of auto loans
Experian data shows that first-quarter borrowers took out auto loans for larger amounts, longer terms and less often from credit unions.
Credit unions generated 20% of the number of loans in the three months ending March 31, up from 20.8% for all of 2020, 21.9% in 2019 and a high 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 in the during the 12 months ending March 31, but rose 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 an all-time high of 32.6% in December. 2018.
Melinda Zabritski, senior director of automotive financial solutions at Experian, presented Experian’s first quarter report “State of the Automotive Finance Market” in a webinar on Thursday, measuring credit unions against other lenders by several. measures.
Zabritsky said she had no explanation for the decline in the credit union’s shares since 2018, which she called “the year of the credit union.” However, she said, when the banks were in withdrawal three years ago, executives said the withdrawal was intentional.
The big picture of the market for the first quarter is one where loans increased while sales continued to recover. Borrowers across the board had healthier credit scores, which resulted in a smaller portion of loans in the subprime and non-prime segments, where the scores are 660 or less.
Many blue chip borrowers turned to the used car market from 2019 due to the high prices and shortages 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 a year earlier 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. On April 26, sales were 92% higher than a year earlier and 6% higher than the previous year. 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 leases 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 origins in the first quarter by 23.9%, while they fell 1.39% for credit unions, 0.98 for banks and 5.61% for finance 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 leases 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 senior borrowers than banks, and significantly more than captive lenders. Borrowers with scores of 661 and above accounted for 74.4% of credit union start-ups in the first quarter, up from 70.6% in the first quarter 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, senior borrowers fell almost a percentage point to 67.6% in the first quarter.
The 60-day-plus 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 have increased from $ 555 in 2019 to $ 575 in 2020 to $ 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 represented 23.4% of loans in the first quarter, against 19.8% in 2020 and 18.9% in 2019. Terms over 84 months represented 0.7% used car loans in the first quarter, up 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.