SAN DIEGO – Credit union leaders are continuing to worry about liquidity in 2024.
Credit Union Leasing of America (CULA) is reporting its (CULA) “Future of Auto Finance” snapshot survey of credit union professionals found 48% of those surveyed said the liquidity crisis will last for another one to two years or more, and only 9% are seeing signs of it abating.
“While our survey indicates that there is still some apprehension among credit unions about the auto finance landscape in the year ahead, there are many positive signs – especially that 85% expect no decline in their auto finance portfolios in 2024, and most are indicating that the trends of extended loan terms as well as high interest rates are easing up,” Mark Chandler, VP-business development, said in a statement. "Many of the credit union professionals we surveyed are looking to further enhance their relationships with auto dealers, which we see as significant because those relationships offer many benefits, including streamlining the loan approval process, more customized loan packets for CU members, and allowing dealers to offer more options, greater lending solutions, and more flexibility.”
Affordability Improves
CULA noted that recent reporting from Experian shows that vehicle affordability is beginning to improve while loan terms are decreasing. That being said, the average monthly new auto loan payment was $726 vs $597 for a lease, and the average term of a new vehicle loan was 68.26 vs 36.18 months for a lease in Q3 2023.
Key Survey Takeaways
According to CULA, key takeaways from the survey include:
- 83% expect the liquidity crisis to last for at least six months to one year or more, with 48% anticipating it will last for one to two years or more.
- 74% expect a significant drop in interest rates in 2024, with 26% saying 2025 at the earliest.
- 86% don’t expect further extension of their loan terms in 2024.
- 85% expect their portfolio to grow or remain flat (46%) in 2024.
- 59% are somewhat (53%) or very (6%) optimistic about the auto finance market in 2024, with 36% apprehensive and 5% pessimistic.
- 59% think that vehicle leasing would be a positive addition to their finance portfolio in 2024, with 30% unsure.
- 95% view partnering with dealerships on auto financing and vehicle leasing as a positive for their members.
- 71% plan to deepen or increase partnerships with auto dealers in 2024.
The “Future of Auto Finance” Snapshot Survey was conducted online Jan.4-25 among 90+ credit union professionals.
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