Credit unions have grown credit card debt while auto loan growth has slowed, according to the Fed’s G-19 Consumer Credit Report. While the Fed report doesn't break down loans by lender type, CUNA Mutual Group estimates that credit unions held 32% of total auto loans reported by the Fed. Part of the slow down is related to the auto industry, which is experiencing slower sales growth.
At the 2019 CUNA Lending Council Conference, Steve Rick, chief economist for CUNA Mutual Group, said that new-vehicle sales would fall from 16.8 million in 2019 to 16 million in 2020.
New car loans fell 0.4% to $19.9 billion, while used car loans grew 7.3% to $23.8 billion. There are a few reasons for this shift. One, as reported in a July 2019 New York Times article, is that the average price of a car has risen to $35,000. Another reason is that interest rates have risen from 5.1% in 2015 to 6.4% in Q4 of 2019. Ride-sharing has also become increasingly popular among younger generations, such as Millenials and Gen Z, leading to fewer car purchases within these groups. And finally, cars are simply lasting longer, leading to a longer upgrade cycle.
Due to the higher cost of new cars and an increase in interest rates, consumers are paying more per month. “It’s a double whammy,” Mike Jackson, chairman of AutoNation, the nation’s largest chain of new-car dealerships, said to the New York Times. “Customers are having monthly payment shock.”
To cope with higher monthly loan payments, averaging $550 for new vehicles, according to Lending Tree, consumers are pushing their auto loan terms out to nearly six years on average.
Flipping back to credit cards, debt held by credit unions increased in December by 8.3% from a year earlier. This represents 6.2% of the debt held by all lenders from the Fed's G-19 report. Across all lenders, the share of credit union debt was up from 6.1% in November 2019 and 5.9% in December 2018.