Guest Opinion: Disciplined Auto Lending Provides Calm Against the Storm
Just about a year ago, I wrote in these pages that credit unions must have felt like they were riding a roller coaster with their auto lending programs. After all, their market share had gone up and down as the overall auto lending industry had several chaotic years.
However, a close look at the numbers this year gives me a slightly different perspective. Yes, market share continues on a somewhat wild ride, and this year credit unions took advantage. Their overall market share was up to 17.34% in the fourth quarter of 2011, a 4.9% increase over the fourth quarter of 2010, while their share of the used loan market reached 21.1%, a 5.7 % year-over-year increase. However, what really struck me was the consistency that credit unions have maintained, despite the industry’s overall volatility.
Low delinquencies, dollars at risk in auto lending
Those disciplined and conservative lending practices seem to pay off for credit unions. When looking at 30- and 60-day delinquencies and total dollar volume of loans at risk, credit unions significantly outperform the market as a whole.
Stability equals longer terms, higher LTV ratio
Because credit unions cater to customers with better credit scores and have well-performing loan portfolios, they can take calculated risks in other ways. This includes lower interest rate terms and higher LTV ratios.