SAN DIEGO–Concerns over liquidity will continue into 2024, but optimism among credit union leaders can also be seen, according to a new report.
The report, from Credit Union Leasing of America and titled “Future of Auto Finance” is based on a survey of credit union professionals, with 48% anticipating the liquidity crisis will last for another one to two years or more, and only 9% seeing signs of it abating, according to the company.
“Nevertheless, the online survey, which was fielded in January 2024, also indicates that 59% of credit unions are viewing 2024 with some optimism (although over one-third are ‘apprehensive’), with 39% expecting growth in their auto finance portfolios in 2024 and only 16% expecting it to decline,” Credit Union Leasing of America said. “There will also be a significant change/drop in interest rates in 2024 predict over 74% of credit union professionals surveyed, although one in four don’t expect that change until 2025.”
One Near-Unanimous Issue
According to the company, one thing respondents were nearly unanimous about (95%) is the benefit to their members of credit union relationships with auto dealers, with over 70% saying they plan to deepen/increase those relationships in 2024.
“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,” said VP-Business Development Mark Chandler 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.”
Key Survey Takeaways
According to CULA, key survey takeaways 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.
For info: https://www.cula.com/
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