In thinking about how UPST may grow their auto loan business I started wondering how big a role credit unions (CUs) play in the auto lending industry. Arguably UPST has been highly successful with CUs for personal lending and a natural extension is to work with them on auto loans.
I apologize if any of this has already been posted in the past year. Sometimes it’s hard to keep up with the amount of posts on companies like UPST so if this is redundant or off topic please delete.
The following research report from the Filene Research Institute (a banking and consumer finance think tank) is about a year old now but gives a good characterization of auto lending for CUs (it’s about a 15 minute read):
Key take aways from the report:
- Overall 82% of new vehicle purchases and 34% of used vehicles were financed in 3Q20
- Vehicle financing makes up a significant fraction of CU loan portfolios, helps attract new members and strengthens existing member relationships
- As of 3Q20 CU auto loans totaled $343B, this is 19.1% of total assets and 29.6% of their total loans
- CUs currently have 26.2M auto loans, roughly 10% of the US adult population
- CU auto loans made up 25% of the $1.36T US auto loan industry
- Post pandemic consumers want digital, no contact, efficient lending and partnering with innovative leaders presents opportunity for CUs to differentiate and compete more aggressively with banks
- Auto lending is highly important to credit unions
The research report author recommends that CUs:
- Speed up their digital transition to online auto loans
- Adopt new innovative technology to better compete with banks
I have no idea if/when auto lending will become a material portion of UPSTs business or if they are pursuing this via the CU channel. However, it does seem that there is a natural fit for UPST and synergy with the CUs that could potentially contribute to significant future revenue.