Auto Loans and Credit Unions

A decrease in the number of new car loans and other loans is the cause of hard times for credit. That is unfortunate: Credit unions offer a unique range of services and usually offer low interest rates to consumers throughout the United States.

A recent report in the Minneapolis / St. Paul Business Journal focuses on the plight of the credit unions in the Twin Cities, but the story would have been about the credit unions across the country. The United States’ economy has led to weak consumer spending to slow. This means that they borrow less money to both traditional banks and lenders and their local credit unions.

The Business Journal story reported that three fifths of the 25 largest credit unions in the Twin Cities reported lower capital ratios this year when compared to last. As the story says, the biggest reason for this is a decrease in these financial institutions loans. Many of the Twin Cities’ saw double-digit percentage declines credit unions in the dollar value of loans they generated in the first three months of 2010 when compared to the same period a year earlier, the Business Journal.

The story quotes Mark Cummins, president and chief executive officer of the Minnesota Credit Union Network, as saying that consumers are taking fewer second mortgages and buy fewer new cars. When this happens, do not pass out as many credit unions auto loans and mortgage loans to them. This, of course, hurting the bottom lines.

Cummins says that the decline in lending is particularly difficult for credit unions to raise capital.

This story demonstrates the far-reaching effects of the sluggish economy of the country. The big recession is over now, thankfully, but the economic recovery is not strong enough for most people. Most of us still feel like we live in times of recession, and many of us are spending – or not spend, really – if the economy continues to decline.

The simple reason is unemployment. The nation’s unemployment rate was still near 10 percent in May slipped into June. This is an unpleasant high number. It makes people nervous. Those who still have jobs are afraid they will not have next month or next quarter.

You can not expect that nervous consumers and to run a new car, even if the car dealers are offering valuable incentives to buy.

The number of car loans will eventually go. That is a certainty. But until they do, will join the credit unions majority of Americans in the exudation of slow economic comeback.