Credit Unions Gain Top Share of Auto Lending
Experian finds credit unions surpassed banks in the third quarter for the first time.
Credit unions for the first time had the highest share of automotive financing, producing more loans and leases than banks, captives or others in third quarter, Experian reported.
Experian’s “State of the Automotive Finance Market” report for the third quarter released Thursday showed credit unions produced 28.4% of the loans and leases from lenders in the three months ending Sept. 30, up from 20.2% a year earlier and 25.8% in this year’s second quarter.
Credit unions surpassed banks for the first time. Banks’ share fell from 27.9% in the second quarter to 27.3% in the third quarter. Captive lenders’ share fell from 22.6% share in the second quarter to 21.9% in the third quarter.
The Fed G-19 Consumer Credit Report released Nov. 7 also showed a sharp increase in market share for credit unions. It showed credit unions had a 34.8% share of the nation’s total balance of motor vehicle loans as of Sept. 30, up from 33.3% in June and 31.1% in September 2021.
Credit unions’ balance share was only about 25% in 2015. It rose to a high of 32.6% by the end of 2018 and fell to a low of 30.1% in June 2021 before setting new records in June and September this year.
The Experian report shows that the big increases in loan amounts in 2021 and early 2022 continue to ease, with used cars showing a small drop from the second quarter to the third quarter.
Melinda Zabritski, the report’s author and Experian’s senior director of automotive financial solutions, said rising interest rates are becoming a bigger factor in pricing than supply.
“Since the start of the inventory shortage, used vehicle values rose at a staggering rate, and that appears to be slowing, which is a positive sign for consumers looking to purchase a vehicle,” Zabritski said.
The report showed:
- For new cars, the average amount financed in the third quarter was $41,665, up $3,911 or 10.4% from a year earlier and up $1,074 or 2.6% from the second quarter.
- New car loan payments were $700, up from $618 a year earlier. Average rates were 5.16% up from 4.09% a year earlier. Terms were 69.73 months, up from 69.51.
- For used cars, the average amount financed was $28,506, up from $26,251 a year earlier and $21,629 two years earlier. Monthly payments were $525, up from $472 a year earlier and $401 two years earlier.
- Average used car loan rates were 9.34% in the third quarter, up from 8.12% a year earlier and 8.39% two years earlier. Terms were 68.08 months, up from 66.97 a year earlier and 65.20 two years earlier.
- Consumers financed an extra $2,256 on used cars compared with a year earlier. But most of the increase occurred from last year’s third quarter to this year’s second quarter. Experian shows the average loan amount fell by $104, or 0.37%, from the second quarter.
- The percentage of loans at least 60 days delinquent was 0.81% on Sept. 30, up from 0.58% a year earlier and the pre-COVID levels of 0.91% for the same date in 2018 and 2019.