A combination of less-generous rate incentives from new vehicle sellers and aggressive rate pricing is accelerating the growth of new car loans at credit unions.
Analysis from CUNA Mutual Group’s October Credit Union Trends Report revealed that those factors contributed to 4.1% annual new vehicle growth as of August.
A reduced rate of payoffs and less competition from home equity loans have also helped grow credit unions’ new vehicle loans, the data showed.
At $177.6 billion, the industry’s total vehicle loan portfolio has advanced in each of the past seven months and is up $9.5 billion or 5.7% year to date, according to CUNA Mutual Chief Economist Dave Colby.
On an annual basis, the $10.6 billion increase translates into a 6.4% gain, he added.
Roughly 48% of all credit union loan growth since August 2011 has been attributable to vehicle loans. Currently, 29.5% of all credit union loans are vehicle loans, up from 28.8% at this time last year, the report noted.
Used vehicles, which represent 19.1% of all credit union loans, are up 6.0% YTD and 7.6% year-over-year.
“This is the strongest growth since mid-2004. Reports from credit unions indicate loan demand remains brisk,” Colby said. “Mid-year data revisions not only confirmed the vehicle lending growth surge, they added to it.”
Overall, total vehicle loans were restated almost $1 billion higher and 0.5% was added to the growth rate, according to the report.