Credit unions see leasing uptick

Credit unions are seeing an uptick in leasing activity this year as consumers continue to grapple with affordability.

Leasing volume at credit unions is up. Credit Union Leasing of America (CULA)’s originations increased 56.3% year over year for funding supplied from January through May, according to data provided to Auto Finance News . San Diego-based CULA provides indirect leasing for credit unions.

“Our belief is that leasing is going to become a bigger portion of the pie of new auto transactions,” Chris Harper , director of business development at CULA, told AFN . “More consumer behavior is going to lean toward leasing just from an affordability standpoint.”

“Our belief is that leasing is going to become a bigger portion of the pie of new auto transactions.” -- Chris Harper, Director of Business Development, Credit Union Leasing of America

The average new-vehicle lease payment was $150 less than the average loan payment in the first quarter at $595, according to Experian ’s Q1 2025 State of the Automotive Finance Market report released June 5. Overall, new-vehicle leasing grew to 24.7% in Q1, up from 23.7% in Q1 2024. CULA’s credit union members are “trying to strike while the iron is hot ... [and] trying to capture as much volume as they can” before consumer spending retracts and vehicle inventory shrinks because of tariffs, Harper said.

However, leasing might not save as much as consumers expect.

“While leasing might offer short-term convenience today, buying is still a smart choice for someone looking to build equity and ownership,” Kevin Wince , vice president of consumer lending servicing, projects and risk at Navy Federal Credit Union , told AFN .

“This ownership can ultimately translate to substantial long-term savings, particularly for those who keep their car for an extended period,” he said.

CU market share growth slowing While credit unions have see a rise in leasing, their market share growth in the auto lending space has slowed, according to Experian’s report. For comparison:

Captives market share shrank 147 bps to 29.8%; Banks’ market share grew 176 bps YoY to 26.6%; and Credit union market share grew 43 basis points (bps) YoY to 20.63%. [caption id="attachment_58352256" align="aligncenter" width="1276"] (Courtesy/Experian)[/caption] Tighter liquidity The dip in market share could be caused by “two constraints: liquidity and credit quality,” Curt Long , chief economist at America’s Credit Union (ACU), told AFN . The Washington, D.C.-based trade association advocates for credit unions at the federal level.

While all lenders face credit quality and liquidity concerns to some extent, liquidity is likely a “bit tighter for [credit unions] than for other types of lenders,” Long said. “When you get into this part of the cycle where delinquencies are rising , credit unions tend to pull back,” which could further slow originations, he said.

“When you get into this part of the cycle where delinquencies are rising, credit unions tend to pull back." -- Curt Long, Chief Economist, America’s Credit Union

Credit unions make up more than half the top 100 companies with origination growth by volume in 2024, according to the latest Big Wheels ranking data . By yearend, they experienced a 0.3% growth in originations YoY, a slowdown from 1.8% a year prior.

“A slowing economy is a more challenging environment for credit unions,” Long said, noting that a slowdown could help ease liquidity constraints.

“One of the ironies of the interaction between the economy and credit unions [is] when the economy slows down, people tend to increase their savings rate, so that can help with liquidity.”

This gives credit unions additional lending capacity and likely contributes to why some liquidity constraints have eased, he said.

As recession talks continue and the auto industry watches for signs of contraction such as decreasing inventory, credit unions are still optimistic about growth, CULA’s Harper said.

“We think we're going to catch a bigger piece of the pie, but the pie may be smaller,” he said.

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