CHICAGO -

With the new- and used-car market booming, it seems subprime buyers are getting a piece of the pie — and many of these consumers are using credit unions to fund these vehicle purchases.

TransUnion released the results of an October survey of 142 credit union executives, and responses flowed in that illustrated the current health of auto loans as well as room for growth in the coming years.

In fact, TransUnion analysts believe auto loans will afford credit unions the most loan growth opportunities in 2015.

According to the survey, 46 percent of responders chose auto loans as the top growth opportunity for the next year; mortgage loans followed with 22 percent. And 84 percent of responders ranked auto loans as one of the top three areas for growth.

According to TransUnion data, auto loans for subprime consumers have jumped by nearly 7 percent in the last year.

Take Q2 results, for example.

Auto loans for subprime customers grew from 8.65 million in Q2 of 2013 to 9.24 million in Q2 2014.

Delinquency rates, or accounts 60 or more days past due, have also risen for subprime auto loan borrowers, growing 11 percent in this same timeframe from 4.73 percent to 5.26 percent.

That said, delinquency rates remain low and should be expected to rise slightly with loan spikes.

And though the bump in subprime loans is promising, TransUnion pointed out rates still remain way under pre-recession rates.

In Q2 of 2008, there were 11.78 million subprime auto accounts on the books, TransUnion reported.

That said, industry experts remain positive.

“While auto loan performance in the last few years has been strong across the board, it is clear that credit union executives continue to value these loans going forward over other growth areas such as mortgages, credit cards and home equity lines of credit,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “Overall delinquency levels for auto loans remain low and demand for autos is high, so the reasoning makes sense. In the longer term, we might anticipate greater focus on mortgage and HELOC growth as home values continue their upswing, but for now the auto loan is king.”

The survey also found that even though delinquency rates are low, credit union execs “remain prudent regarding member credit risk.”

According to the survey, over half of the respondents rated credit risk as one of the top three challenges for credit unions to meet loan growth goals over the next year.

Following credit risk cited as challenges for the credit unions today were competition from other lenders as well as regulation that could have an impact on their loan growth goals.

And it seems the credit unions are worried about one element of credit risk, in particular: student loan debts.

According to the survey, approximately six in 10 credit union execs are at least a little concerned about their members’ student loan debts and home equity line of credit (HELOC) with other financial institutions.

But with more credit union members growing, student loans are bound to remain an issue going forward.

The survey showed that membership for most credit unions grew over the past 12 months.

In fact, 61 percent of credit unions have seen up to 5 percent spikes in volume, while more than a quarter have reported increases of more than 5 percent.

And with this spike in membership comes a boost in confidence among credit union management.

According to the survey, seven in 10 credit union executives believe they are more capable of competing with traditional banks today than they were five years ago.

And more than half of the respondents believe their capability to compete with traditional banks has improved in just the last year alone, Transunion reported.

“Results from our study and our daily interactions with credit unions from across the country lead us to believe that this industry is in a position to achieve and maintain substantial growth,” said David Dodson, vice president of credit unions at TransUnion. “Using new technologies and risk management strategies will be among the catalysts to help credit unions make great strides in building their books of business in 2015.”    

TransUnion Purchases Analytics Company L2C

In other news from TransUnion, it has also been ramping up its data offerings with the recent acquisition of L2C, a predictive analytics company.

"We are committed to leading the industry with highly predictive risk solutions, and joining forces with L2C is a big step forward," said Chris Cartwright, president of TransUnion's USIS division. "L2C data is a great addition to our alternative data array. When combined with other data such as rental information and our CreditVision suite of services, it allows us to offer lenders a more complete and accurate picture of non-traditional and underbanked consumers, helping these people get the credit that they deserve."

L2C analytical models are used to grow portfolios in traditionally financially underserved consumer populations.

"L2C's ability to provide predictive scores on more than 90 percent of consumers without a credit score will be an excellent complement to TransUnion's robust solutions," said Mike Mondelli, CEO of L2C. "Our real-time and off-line behavioral insights afford some of the most sophisticated lenders in the U.S. market an ability to expand their customer base. Now, as part of a growing set of expanded TransUnion data capabilities, thousands of TransUnion customers will be able to access L2C models for improved acquisition, segmentation, and retention decisions."