Now reaching over $500 billion a year, the auto financing market is one
of the fastest growing sectors in consumer finance.
Over the past decade, the “special finance” or sub-prime auto lending market
has grown significantly, now accounting for 30-35% of the overall market with
many indicators pointing to even more growth (CNW Research). With new and used
auto sales near record levels and with 1/3 of U.S consumers in this “special
finance” sub-sector, many credit unions see an opportunity to originate more
loans and to help a member who would have likely chosen another loan offer.
Many credit unions have started working with outside vendors to help their
special finance members, while other credit unions have developed programs in-house.
The special finance market is by no means restricted to auto lending. Sub-prime
mortgages made up about $210 billion, or 10% of all mortgages in 2002 (Freddie
Mac). With the average credit union first mortgage balance at about 10 times
the size of the average vehicle loan balance, losing a member’s first mortgage
loan due to credit restrictions could be very damaging to that member’s future
relationship with the credit union.
Listen to the discussion on
this unique market opportunity and how leading credit unions are managing their
sub-prime programs to boost returns and provide increased member value through
more originations to lower credit members.