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CUs take measures as auto loan delinquencies drop
SCHAUMBURG, Ill. (8/9/12)--Consumers continued to make timely automotive loan payments in the second quarter, lowering the average delinquency rate across all lending organizations, including credit unions, captive finance arms, finance companies and banks, Experian Automotive announced Wednesday.

The analysis indicated that the 30-day delinquency rate was 2.52%, compared with 2.59% in the second quarter 2011. The 60-day delinquency rate was 0.58, down from 0.6% in second quarter 2011.

Vehicle repossessions also dropped, coming in at 0.43% in second quarter 2012, compared with 0.59% for that period last year. That is a 27.9% drop year over year.

"Consumers continue to do an excellent job of paying back their vehicle loans in a timely fashion, and that's good news for everyone in the industry," said Melinda Zabritski, director of automotive lending for Experian Automotive. "Both 30- and 60-day delinquencies are at historic lows, and the percentage of money at risk has dropped as well. This gives lenders needed stability, which filters through the auto industry to consumers in the form of easier-to-obtain loans."

Second-quarter total balances of loan portfolios also rose for all types of lending organizations, reaching $682 billion, compared with $646 billion in second quarter 2011. Despite this strong growth, overall loan balances still lag behind prerecession levels, said Experian Automotive. In second quarter 2007, outstanding loan balances reached $701 billion.

"Automotive loan portfolios continued their strong comeback in second quarter 2012, as delinquencies continued to drop and total dollar volumes continued to rise," Zabritski said. Noting the high interdependence between the automotive loan industry retailers and financial institutions, "this continued strong performance for loan portfolios is good for automotive retailers and consumers alike," she added.

Nationwide, 29.1% of all credit union loans in June were auto loans, according to the Credit Union National Association's (CUNA) Monthly Credit Union Estimates. New-auto loans were 10.2% of all credit union loans--down from 10.5% in June 2011. Used-auto loans constituted 18.9% of all credit union loans--up from 18.3 the previous June, CUNA said.

Credit unions work harder to help their members avoid delinquencies on loans. For example, Neighborhood CU, a $314 million asset credit union based in Dallas, gives members six months to walk away from their auto loans if they lose income due to unforeseen circumstances ( July 26).

Its Vehicle Return Program is one of four components in a bundle of supplemental insurance options on auto loans the credit union offers in a package called the MPower Vehicle Protection Plan. It also recently began offering 72-month auto loans with a 2.74% annual percentage rate and 90 days of no down payments.
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