Auto Lending Report Shows Significant Credit Union Member Savings

February 7, 2023 |

(From CUNA News) – Credit unions continue to fulfill their mission through extremely favorable auto lending interest rates, according to CUNA’s inaugural Credit Union Auto Lending Monthly Report. The report—covering September 2022—shows consumers on the lowest end of the credit score spectrum average $13,204 in life-of-loan savings compared to other lenders.

“Access to reliable transportation is a foundational aspect of financial well-being for consumers,” said CUNA Chief Economist Mike Schenk. “The significantly lower average monthly auto loan payments result in substantially higher levels of financial resilience among credit union members compared to non-members.”

National trends in credit union auto lending in September 2022 include:

  • Credit unions’ market share reached 31% in September up from 28% same period last year.
  • Credit union balances grew by 17.4% over a 12-month period ending in September and 16.5% year-to-date.
  • Credit unions’ market share of new loan originations reached another peak in September 2022 at 42.5%, making these member-owned depositories the top auto lender in the county. Credit unions captured 30.0% of the market same period last year.
  • Credit unions’ performance in new loan origination has been strong this year while other lenders generally experienced declines in balances. The year-to-date growth rate in origination for credit unions as of September was 28.2% higher compared to the previous year.
  • Credit unions extended more loans to nonprime credit score borrowers compared to other depository institutions. Non-prime borrowers account for 23% in September 2022 compared to only 14% at banks.
  • Credit union loan pricing is generally very favorable across the credit score spectrum. In September, the typical consumer with an average credit score who financed a six-year $40,000 auto loan at a credit union would pay an annual interest rate of approximately 5.45%—below the 6.86% bank average rate and well below the 7.64% average rate at a finance company.
  • The payment performance of all nonprime borrowers is substantially higher at credit unions than at banks. This is due in part to lower interest rate at credit unions which makes loans affordable to members. The 60+ days delinquency rate in September 2022 for credit unions at 0.24% is the lowest in the industry (0.1% for prime borrowers and 0.7% for non-prime borrowers).