CUNA Report Estimates Auto Loan Originations

CUNA has launched a new report that fills a gap in credit union data.

While auto loans make up about a third of credit union portfolios, there is no auto origination data from NCUA and no origination data is included in CUNA’s Monthly Credit Union Estimates.

CUNA’s “Credit Union Auto Lending Monthly Report” launched Feb. 2 included estimates on credit union auto loan originations and pricing based on a sample from the Equifax Analytic Dataset. Moreover, it included comparisons to banks and finance companies by credit tiers.

The report showed credit union rates weren’t much different than banks a year ago, but as the Fed raised rates in 2022, credit unions were slower to raise rates on auto than banks.

The result was that by September 2022 — the most recent month in the report — credit union rates were about 1.5 percentage points lower than banks when averaging rates for the five tiers. A year earlier, the gap was less than 30 basis points.

The report showed 76% of credit unions’ auto loan portfolio on Sept. 30 was to prime and super prime borrowers (those with credit scores of 660 and up), while they accounted for 85% of bank loans. Originations were similar: 79% of credit union loans produced in September were prime, compared with 87% of bank loans.

“Credit unions are much less likely to originate loans to super prime borrowers, and more likely to loan to people in the lower rungs of the credit ladder,” CUNA Chief Economist Mike Schenk said Monday.

The report also filled in a missing piece of the puzzle of falling loan originations.

NCUA data allows a quarterly look at originations for all loans and by a variety of real estate categories. CU Times has used those numbers to report “non-real estate loan” production with auto lending being a large but undefined component.

The answer? Auto loans were more than half of non-real estate loans and about a third of total loans in the first half of the year.

The report showed auto loans accounting for about 60% of loans in the first half of 2021 and 2022, about 50% of the 2021′s second half and 51% of 2022′s third quarter.

And while balances in September were up a record 18% from a year earlier, originations were slowing.

The report showed credit unions originated $61.1 billion in auto loans in the three months ending Sept. 30, up 5% from a year earlier. That was down from 33% growth for the first half.

Production of non-real estate, non-auto loans like credit cards and personal loans fell 4% in the first half, but rose 5% in the third quarter — matching auto loan production.

Top 10 data showed non-real estate originations continued to fall in the fourth quarter. If that holds for the credit union movement as a whole, the CUNA reports will show how much autos contributed — eventually.