Rethinking the Road Ahead: How Credit Unions Can Steer Through Auto Lending Change
Credit unions are rethinking their approach to auto lending as market pressures mount. Falling vehicle values, higher insurance rates, and changing consumer behaviors are reshaping lending strategies. Allied Solutions’ Jack Imes discusses how agility, predictive analytics, and proactive member engagement can help credit unions manage risk and sustain growth.
Originally published on CUToday.info
Credit union auto lending, long considered a reliable cornerstone of the movement’s lending strategies, is facing an era of profound change. Every corner of the market is under pressure—falling vehicle values, shifting consumer behaviors, rising insurance costs, and intensifying regulatory scrutiny are converging in ways industry leaders say they’ve never experienced before.
“This isn’t business as usual,” said Jack Imes, chief lending consultant at Allied Solutions. “What was once the foundational building block of a credit union’s balance sheet still is—but now you have to manage it month by month. You can’t just look at your auto loan portfolio once a year anymore.”
According to the NCUA’s latest system performance data, credit union vehicle loans fell by $6.5 billion, or 1.3%, in the second quarter of 2025, slipping to $483.5 billion.
The forces reshaping the auto finance market are wide-ranging. Car values that soared during the pandemic have begun to cool, leaving lenders exposed on older loans. Insurance and maintenance costs are surging, in some states like Florida reaching unprecedented levels. Meanwhile, younger generations are altering traditional patterns of ownership—sharing vehicles, delaying purchases, or turning to leasing as a more affordable path into newer cars, Imes explained.
Layer onto that the unpredictability of inventory levels and the industry’s uncertain shift toward electrification.
“One minute cars are up, the next they’re down. Inventories evaporated, now they’re back. Even the EV timeline is changing—what was once seen as inevitable by 2030 has already been rethought by some automakers,” Imes noted.
The Risk Of Standing Still
The greatest danger, Imes warns, is complacency. Many credit unions have historically excelled at auto lending, but the pace of change today is relentless, Imes reminded.
“The mistake is thinking you can just power through by working hard and serving members the way you always have. The values are changing, the demographics are changing, the risks are changing. If you’re not on top of it constantly, you won’t see the problem until it’s too late,” he said.
To avoid that trap, credit unions must embrace continuous monitoring, predictive analytics, and even artificial intelligence to anticipate trouble spots in their portfolios. “You’ve got to know where the new pitfall is before it hits you,” Imes said.
Balancing Agility And Trust
For credit unions, the challenge goes beyond financial performance. Members expect speed, convenience, and digital options—but also thoughtful, compliant lending.
“There’s a growing tension between speed and precision,” Imes explained. “Members want quick decisions, but you can’t sacrifice trust or compliance. Balancing those forces requires better data, smarter workflows, and a culture that supports both agility and accountability.”
That balance is particularly vital in recovery strategies, where preserving the member relationship is as important as managing delinquency, Imes noted.
“Even the best tools only go so far without the right people and the right relationships,” he said.
Despite the headwinds, Imes is clear: auto lending remains core to credit unions’ success.
“It’s like the checking account—it’s part of the fabric of what we do. Members still need vehicles, and credit unions are still best positioned to finance them. But the environment is evolving so quickly that we have to evolve with it,” he said.
That evolution may include embracing leasing again, particularly for younger buyers seeking affordability, or finding new ways to communicate—whether through text, apps, or other digital channels. What matters, Imes emphasized, is staying alert and adaptable.
“The auto loan will always be a foundational building block of the credit union. But in today’s environment, you can’t set it and forget it. You’ve got to live in it every day,” he said.
Imes added that he believes an auto refinance boom is coming.
“With a declining rate environment, there will be a lot of folks rushing to refi their cars—even more so with the large fintechs out there who use social media, marketing and various algorithms to source out these opportunities and then turn around and sell those loans back to credit unions,” he said. “Having these companies help grow these loans at your front door while proactively protecting what is already on your balance sheet is a must for shops that want to grow their auto loan balances.”