Jessica and I have been busy traveling around the country working with credit unions. It’s been a hot summer and while we know the temperature is rising, we know that summer is a season and it will end. Winter is around the corner.

Can the same be said for this overheated auto market?

Experian’s State of the Auto Finance Market Report for Q1-2022 states that the average amount financed for used vehicles has increased from $21k to $28k since the pandemic, while the average payment has only increased approximately $100. Loan terms over that same period of time have increased from 65 months to 68 months. The Bureau of Labor Statistics reports that the average vehicle price has gone up over 40 percent in the last year, far more than loan amounts have increased.

This average of $100 is eating into budgets, however, wages have increased significantly over the same period. Are cars reaching the point that the average family can’t afford to drive their kids to school? Not likely, There is an equilibrium that will settle out, capitalism always wins.

That isn’t to say that things are tightening up financially. Regardless of the new definitions of recession that are being floated about, we are beginning to cool off. The same is true today as it has always been, auto loans perform better than home loans. “You can sleep in your car, but you can’t drive your house to work.”.

Are your lenders underwriting to affordability? What metrics and measurements are they assessing to determine if this new vehicle loan fits this member’s budget? Good news, we like to train lenders! Might be time to schedule that training you’ve been thinking about as we head into winter. Give us a call

Don Arkell


CU Lending Advice

Consumer Lending & Sales Training