Six Trends, Challenges and Projections Impacting Your Auto Lending Business

By Chris Harper, Senior Director, Membership | Filene Research Institute

Across the credit union system, auto loan growth has flattened in recent years. Consumer preferences, economic conditions, competition, and technology has been shifting since long before the start of the COVID-19 pandemic. Even under normal conditions, these changes are nothing to ignore, especially when vehicle financing through auto loans makes up a significant fraction of credit unions’ loan portfolios. But what does a flattened market and a shifting environment added on top of a life-changing pandemic mean for credit unions when it comes to their auto lending business?

While I can’t predict the future, as much as I wish I could (hello, lottery tickets!), I can tell you from my years of experience working in credit union, auto lending and technology fields, what the trends I’m seeing are pointing toward, what Filene’s research on auto loan trends and challenges are projecting for the impact to the industry, and what you should be planning to do about it.

First, this goes without saying, but I want to be very clear: a solid understanding of current auto trends has never been more important. In addition to auto loans making up a significant portion of credit unions’ loan portfolios, a robust auto loan portfolio offers an asset that allows your credit union to be responsive to the interest rate market without the long-term risk inherent in the mortgage space.