Credit unions are struggling to attract and retain younger members from millennial and Gen Z consumer segments, a concern that is becoming more urgent as the median age of credit union members has risen from 42 to 52 over the past two decades, according to America’s Credit Unions.
Credit unions that want to compete with larger institutions should make tapping into these consumer segments, particularly Gen Z, a priority. Between now and 2044, an estimated $90 trillion will pass from The Silent Generation and baby boomers to the hands of millennials and Gen Z, as reported by Forbes Global Properties, creating one of the largest wealth transfers in history.
Credit unions need a strategy to better reach these younger generations, and auto lending may hold the key.
The Gen Z Growth Opportunity
Credit unions currently hold a significant share of the auto lending market, yet many institutions are scaling back due to economic factors such as global trade tariffs and fluctuating interest rates. Amid this ongoing uncertainty, consumer behaviors and preferences are shifting in response to the increased cost of living. Despite market volatility, consumers seeking to finance their vehicles should strongly consider credit unions.
According to the recent Equifax Auto Insights Report for 2025, 29% of Gen Z’s auto loans originated from a credit union rather than a bank or captive lender. Credit unions continue to differentiate themselves as an auto lending option by offering personalized service and competitive interest rates with flexible credit standards and repayment terms.
Finding a way to maintain their auto market share while attracting younger members is an uphill battle that can be simplified with the correct tools and strategies. For instance, the ability to instantly verify an applicant’s income and employment enables credit unions to close loans quicker and tackle risk.
Balancing Risk With Responsible Lending
Gen Z consumers are vital to credit unions that want to expand their auto lending portfolios. However, these institutions are tasked with ensuring that this is done responsibly, as this consumer segment generally has shorter credit histories.
From 2020 to 2024, car prices jumped from $38,960 to $48,397, according to Equifax, and average vehicle interest rates rose from 4.22% to 7.57% contributing to nearly 20% of new car shoppers agreeing to monthly payments of $1000 or more in the second quarter of 2025, according to Edmunds. Moreover, auto delinquencies are rising, as consumers fall behind on payments. Approximately 2.3% of Gen Z have overdue loans, Equifax found, accounting for the highest rate across all age demographics. As a result, many lenders, credit unions included, are hesitant to add Gen Z credit loans onto their portfolios. Economic volatility is creating uncertainty, and many lenders would rather wait out the storm than take the risk.
Managing risk while attracting new, younger members is a tough balancing act, yet lenders who take a “wait-and-see" approach run the risk of falling behind their competition. Today, many credit unions are countering this by leveraging alternative data and instant verifications of income and employment to expand their loan portfolios without exposing themselves to unnecessary risk.
Intelligently Expanding Loan Portfolios Through Data
Data and consumer financial insights are invaluable assets for credit unions. These tools are helping lenders expand their pools of eligible borrowers by mitigating blind spots that would normally obscure a member’s financial history.
Traditional credit scores remain the gold standard for determining creditworthiness, and many lenders are adding further data sources to obtain a more holistic view of a consumer’s unique needs or overall financial position. For example, many credit unions are leveraging alternative data sets that consist of borrower information, such as telecommunications, pay TV and utilities payment history in addition to the credit score.
Lenders can augment the effects of this data by integrating instant and seamless income and employment verification. Instant VOIE (verification of income and employment) provides insights to credit unions that allow them to engage members and prospects with personalized offers while managing risk effectively.
The Bottom Line
With an aging membership base, the tools that credit unions leverage to reach younger consumers are more important than ever. Younger consumers are demanding services that align with their current financial situation, and credit unions are in a prime position to meet this opportunity by using expanded data to modernize their offerings and deliver meaningful value.
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