Credit unions nationwide are making more auto loans as consumers begin to replace aging vehicles. But in Las Vegas a sluggish economic recovery has dampened the rebound in new auto loans.
“We are seeing some good growth in refinancing of auto loans,” said Brad Beal, president of One Nevada Credit Union. “The auto loan side is pretty slow. This economy is still struggling. With a 12 percent unemployment rate, it’s pretty hard.”
Beal said One Nevada’s auto loan portfolio was $81 million at the end of the first quarter, with included almost $15 million in auto refinancing sitting on the books. He said with rates at 2.98 percent, it makes sense to market refinancing to consumers who might be stuck with auto loans with a 6 percent, 7 percent or even higher interest rate.
In unit volume, auto loans represent the largest portion of all credit union loans at 32 percent, according to CUDL, a subsidiary of CU Direct Corp. As of Dec. 31 , auto loans represented 29 percent of the average credit union portfolio. Credit unions account for 17.4 percent of the total auto loan market, CUDL reported.
Clark County Credit Union President and CEO Wayne Tew said “lending volumes were up,” but the problem is that new loans are “equaling the pay-downs,” meaning the credit union is breaking even on its auto loans.
Tew said Clark County also benefits from refinancing auto loans. He said a typical credit union member will try to refinance within a couple of weeks after purchasing a car from a local dealer.
Clark County Credit Union has
$100 million in its auto loan portfolio, he said.
Although Tew expects new-car financing to improve as the economy improves, he said he didn’t expect much movement on the economy until “we fill up some of this inventory of real estate floating around here.”
WestStar Credit Union CEO Rick Schmidt said, “It is slowly improving. Like all financial institutions in the area, all lending took a big hit over the last few years.”
Schmidt said since reaching the low point in March 2011, WestStar has seen a 5 percent to 7 percent growth in its auto lending. WestStar was unable to provide auto loan portfolio figures on Monday.
“We have tried very hard to stimulate loan growth,” he said. “But the biggest problem we have is (consumers) who have real challenges.”
Those challenges include poor credit or high debt, he said. Schmidt said other factors, including the region’s high unemployment rate, make it difficult to find the people who are worth lending to.
Since February 2011, used-vehicle loans have been among the biggest contributors to the industry’s overall lending numbers, according to the April edition of CUNA Mutual Group’s “Credit Union Trends Report,” which tracked data through February.
At $6 billion, used vehicles were in second place behind mortgages at
$11.3 billion and ahead of member business loans at $2.8 billion.
“Our early forecast estimates show total vehicle growth above 2 percent in 2012, primarily due to less drag from the new vehicle component,” CUNA Mutual Group chief economist Dave Colby said.
Contact reporter Chris Sieroty at
firstname.lastname@example.org or 702-477-3893.
Federally Chartered: 13
Number of Credit Union Members: 362,451
Total Assets: $3.72 billion
Source: California, Nevada Credit Union Leagues