A recent survey by TransUnion finds that credit unions will be putting a great deal of emphasis on auto loans for the next twelve months
Credit Unions and Poor Credit Buyers
Here at Auto Credit Express we've always felt that consumers with bad credit that belong to a credit union owe it to themselves to at least try this option first. That's because while it isn't usually the case, we have seen situations in which credit-challenged consumers looking for approval for an auto loan with poor credit have received a car loan approval from their credit unions.
Unlike most lenders that are publicly owned corporations such as large banks, credit unions are nonprofit organizations owned by their member customers. Because they're member owned they don't have to worry about profits to stockholders so they often can offer lower interest rates on car loans. This means that, typically, credit union car loans feature lower interest rates than comparable auto loans offered through banks.
The most important thing credit-challenged borrowers need to know, however, is that there's always the chance they may not qualify for a car loan through their credit union. Because unlike the subprime lenders our dealers work with, credit unions typically don't approve applicants with some of the worst FICO scores.
Still, it never hurts to give credit unions a shot, which brings us to today's topic.
TransUnion 2014 Credit Union Survey
According to a survey released by TransUnion earlier this week, auto loans from credit unions will continue to rise for at least a year. This is due to a continued high demand for new and used cars along with auto delinquency rates that continue to be low.
Of the credit union executives surveyed, 45.8 percent ranked auto loans first in terms of growth, while 83.9 percent ranked auto loans as one of the top three categories for loan activity.
Whether or not this activity will include more borrowers with poor credit, however, is not so certain. According to TransUnion, while subprime auto loans have grown nearly 7 percent during the past year, delinquency rates (60 or more days past due) have increased approximately 11 percent during that same timeframe. The report also found that more than half the executives surveyed (52 percent) "rated credit risk as one of the top three challenges for credit unions to meet loan growth goals over the next 12 months."
So despite the fact that credit unions want to make more car loans, they also want to be careful of the type of customer they'll loan to – especially those with the riskiest credit profiles.
The Bottom Line
The latest credit union report from TransUnion has some good news and some bad news for consumers with less than perfect credit. The good news is that they plan on increasing the number of car loans they offer. The bad news is that they also plan on keeping their risk levels low. But despite the mixed results, we still think even buyers with credit problems should first explore the possibility of a car loan with their credit union before checking out other lenders.
One more tip: if you have been turned down by your credit union, we want you to know that Auto Credit Express specializes in helping consumers like you find car dealers for your best chance at an auto loan approval.
So if you're serious about getting your car credit back on track, you can begin now by filling out our online car loan application.