ARLINGTON, Va. - NAFCU's Flash Report for June delved into the key credit union service of vehicle lending and how credit unions are packaging these loans recently.

"Despite the fact that real estate loans now comprise the majority of many credit unions' loan portfolios," the Flash found, "vehicle lending is still important to many credit unions, particularly the smaller ones.Indirect lending has been a major support for vehicle loan demand over the past several years."

Seventy-two percent of respondents indicated that they offer indirect vehicle loans, all of which use risk-based pricing for those loans. In addition, 97% also use risk-based pricing for their direct vehicle lending programs as well.

As the cost of everything goes up with time, credit unions are extending the maturities for their car loans. Fifty-seven percent of credit unions said the maximum maturity for a vehicle loan is seven years and another 23% capped it at six years. Only 5% said their maximum car loan was five years. Fifteen percent replied "other," which was evenly divided between eight years, nine years, and 12 years for RVs.

For the 20% of credit unions that said they have a maximum amount for a vehicle loan, 33% said it was $100,000 and another 25% said $75,000. Additionally, 8% capped loans at $70,000 and 8% set the limit at the value of the new vehicle.

Even limits on used vehicles reached $100,000 for a quarter of the responding credit unions. Another 17% maxed out at $75,000. Fifty thousand dollars was the cap for 17% of respondents, $15,000 for 8% and the value of the used vehicle for 8%.

The biggest competition for new vehicle loans according to 54% of credit unions was the captive finance companies. One-quarter said their greatest competitors were other credit unions while 13% said it was banks and 8% answered non-captive finance companies. Concerning used vehicle competition, the largest group of credit unions (34%) considered other credit unions their biggest competitors. Another 32% said it was banks, 25% answered captive finance companies, and 9% responded non-captive finance companies. -scooke@cutimes.com

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NAFCU Finds Most CUs Offer Indirect Car Loans, Stretching Maturities

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