Credit unions contributed to a rise in digital securitization transactions in the second quarter, a byproduct of their overall issuances rising to five or six a year from 1 or 2 in 2022.
U.S. auto loan ABS issuance by credit unions totaled $2.1 billion across six issuers in 2025, up 1.6% from 2024, according to S&P Global. Year to date, five credit unions have made issuances totaling $1.6 billion, according to CreditFlow, which monitors securities.
PenFed Credit Union, which issued a $353.6 million transaction backed by prime auto loans in June, aims to remain a “programmatic issuer and expects to access the auto ABS market at least once per year,” Sandilya Hota, vice president of capital markets, told Auto Finance News at the time.
Several issuers, including specialty auto finance companies, fintechs and captives, moved from one-time transactions to repeat issuance in the second quarter, which translates to boosted digital securitization and signal more auto financiers view it as a workable funding approach, Matthew Babcock, who works on digital lending product strategy for software provider Wolters Kluwer, told AFN.
The securitization digital adoption rate, which measures the volume of e-contracted auto loans in asset-backed securitization transactions, rose 61% YoY in Q2, according to Wolters Kluwer’s Q2 Automotive Finance Digital Transformation Index, published in July. That was despite an 8% quarter-over-quarter decline, Babcock said.
Credit unions are increasingly exploring digital securitization, Babcock said, noting their auto ABS issuance grew in the first half of 2026 compared with the first half of 2025.
Credit unions that recently came to market with auto ABS deals, according to CreditFlow, include:
- American Heritage, which issued a deal backed by prime auto loans in July;
- PenFed Credit Union, which issued a prime deal in June; and
- Space Coast Credit Union, which issued a prime deal in April.
As relatively newer entrants to the market, credit unions don’t necessarily have the securitization branding that Ford Motor, General Motors or Toyota have, meaning they must convince investors that it is safe and secure, Babcock said.
“The market’s seeing more credit union issuance,” Babcock said. “And then the digital side is seeing an explosion on that end as well … because they’re working so hard to establish that brand, safety net and confidence from investors.”
Wolters Kluwer also sees consolidation playing a role. The larger a credit union becomes, the more assets it might have on its books to allow it to explore digital securitization, Babcock said.
E-contracting volume grows
The volume of auto loans completed electronically grew 2% YoY and 7% QoQ, while digital adoption growth is up 63% since Q2 2022, according to the index.
Q2 digital adoption mirrored auto industry sales activity that ended the quarter on a strong note, per Wolters Kluwer, which cited Cox Automotive‘s estimate that June new-vehicle sales landed at 1.36 million, up 7% YoY.
“Digital adoption seems like it’s becoming less dependent on those fintechs, on those early adopters,” Babcock said. “It’s becoming diversified across lenders in the entire automotive space.”
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