CINCINNATI—As credit unions look to revive auto lending in 2026 after a sluggish year, one lending tool may become indispensable: vehicle leasing.
With new-car prices still historically high, negative equity rising, and manufacturers fighting for market share, leasing is poised for a major rebound this year—and credit unions that remain on the sidelines risk losing out on strong, recurring loan volume.
That’s the message from Scot Hall, executive vice president at Swapalease.com, who says the economic and market dynamics heading into 2026 are aligning in ways that make leasing not only attractive, but essential.
“Prices are up and they’re not coming down anytime soon,” Hall said, noting that inflation, tariffs, supply volatility, and chip-related uncertainty continue to push vehicle pricing higher. “Leasing is a great way to combat that. It’s also a great way to get somebody out of negative equity in a relatively short period of time.”
Market Conditions Are Setting the Stage For A Leasing Revival
New-car demand remains solid, but affordability continues to deteriorate. As of fall 2025:
The Average new-vehicle price: $47,936. Negative equity at trade-in: $7,251 on average, affecting roughly one in four consumers. New-vehicle sales are projected to the year at 15.3 million units, down from the 16.5–17 million levels seen in the mid-2010s.
Leasing penetration, meanwhile, has fluctuated in recent years—dropping from pre-pandemic highs above 30% to the mid-20% range as inventory tightened and incentives evaporated. Manufacturers are now expected to ramp up lease programs again as they battle for market share.
Hall believes they’ll have no choice.
“I do believe all the manufacturers should be bullish on leasing in 2026,” he said. “It’s a great way to move the metal—especially electric vehicles.”
Scot Hall
EVs, he noted, rely heavily on leasing because high sticker prices make monthly payments prohibitive on long-term retail loans. Leasing also lets consumers adopt newer technology without committing to ownership risk.
Why 2026 Looks Like a Turnaround Year
Hall expects overall new-car sales to climb this year as the economy improves and rates stabilize.
New car sales landed at 16.2 million units in 2025 and Hall believes 2026 will pass that figure.
“I’m bullish about 2026,” he said.
But there’s a catch.
“We’re not going to get well over 16 million unless leasing is a bigger piece of the pie,” he said. “There’s just no way with these prices.”
Manufacturers, Hall believes, will aggressively push leasing to stimulate volume—opening the door for lenders, including credit unions, to re-evaluate their approach.
A Tool For Reducing Member Negative Equity
One of the most important advantages of leasing, Hall emphasized, is how it helps consumers escape the mounting negative equity created by today’s 72-, 84-, and even 96-month car loans.
“With these longer-term loans and the way the market has fluctuated, negative equity has become a huge problem,” he said. “Leasing could be a tool that helps get members out of that. You flip a customer into a lease, and in two or three years that negative equity is gone.”
For credit unions, that’s also a portfolio-risk benefit: reduced losses, cleaner LTVs, and improved member financial health.
“You’re not in the right ratios with negative equity—it’s a collateral risk,” Hall said. “Leasing moves the opposite direction.”
Why Credit Unions Should Revisit Their Leasing Programs
Hall believes credit unions have far more room to grow in leasing than most realize.
“There’s a lot of growth opportunity for credit unions on the leasing side,” he said. “It’s something they could be really good at.”
Unlike captive finance companies tied to a single manufacturer, Hall said credit unions have a strategic advantage: they can be selective.
“There are vehicles that historically just have not leased well,” Hall explained. “But from a credit union perspective—you’re agnostic. You can pick and choose. If you weed out the models that don’t perform well, you can create a profitable leasing program that’s great for consumers.”
Credit unions also benefit from leasing’s shorter loan cycle. A member who leases for 24 or 36 months is back in the credit union’s pipeline far more frequently than someone locked into a 72- or 84-month retail loan.
“You’re seeing that customer sometimes twice as often,” Hall said. “That’s a major opportunity for relationship growth.”
Conclusion: 2026 Will Test Whether Credit Unions Are Ready
The economics are clear:
- New-car prices remain too high for many members
- Negative equity is worsening
- Manufacturers need volume
- Leasing can solve all three problems
“There’s no doubt leasing is going to increase,” Hall said.
=================================================
Remember, you're not alone with NCOFCU.org
|
Comments
Post a Comment
Please no profanity or political comments.