Auto Loans Crucial to CU Business Growth, Execs Say

Two of every three credit union executives anticipate loan growth being a pivotal part of their business this year with auto loans playing a major role, found a recent TransUnion survey of 104 credit union execs in late February. 

With delinquencies near historic lows, credit unions are banking on auto loans to deliver a large revenue opportunity. “TransUnion projects auto loan delinquencies to continue to remain low with balances rising for the remainder of the year — pointing to more new and used auto sales,” David Dodson, credit union vice president in the company’s financial services business unit, said in a published report.

The study found that 60-day auto delinquencies were 0.41% in 4Q12, and forecasters anticipate they’ll stay around 0.40% by yearend. Per-borrower auto debt rose for the seventh consecutive quarter, the study revealed, and is expected to increase to $14,000 by the end of this year from the $13,747 seen in the final quarter of 2012.

Loan growth was top of mind for a whopping 68% of the execs surveyed by TransUnion, while 11% reported regulation, 7% cited technology/operation efficiencies and 6% named membership growth as their main concerns.

Challenges quoted in meeting the loan growth potential was competition from big banks and captives (40%), regulation (27%), and “lack of prospects” (17%).