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Tax Season Will be Bigger…But Take Longer

Here’s some good news. According to the most recent IRS data, the average tax payer will see a four percent increase in their refund versus the same time last year. This boost in 2024’s average refund size is due to the IRS’ adjustment of many tax provisions for inflation. The standard deduction and tax brackets were set seven percent higher for the current 2023 tax filing year. Because of that, workers whose pay didn’t keep up with last year’s high inflation are on track to get bigger tax refunds, with some lucky ones likely to receive up to 10 percent more in 2024.

And now the bad news. It might take longer to receive that tidy refund than in years past. While the IRS says it issues more than 90 percent of tax refunds within three weeks of receipt, the agency is quite a bit behind that pace in 2024. Several reasons factor into the delay. The agency had an additional week to process returns last year and the overall number of taxpayers filing on time is down. Changes to the tax code, increased safeguards against identity theft, as well as new “Where’s My Refund” tracking software have all impacted processing speed.

For retail automotive dealers and lenders who are counting on the April refund bump in car sales, it’s time to put another plan in place. According to a new study from Bankrate, half of all Americans scheduled to receive a refund are planning to use their checks to pay down debt or bolster savings versus a making a big purchase such as a vehicle. However, there are opportunities for credit unions to boost the odds of capturing those consumers who do decide to apply a tax refund towards a vehicle.

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Data Security Beyond Your Front Door

Brien Joyce Vice President EFG Companies
Contributing Author:
Brien Joyce
Vice President
EFG Companies

Credit unions are guided by a series of internal, state and federal rules and regulations pertaining to data security. One example is the requirements established by the National Credit Union Association (NCUA). This entity has set forth the IT Security Compliance Guide designed to summarize the obligations of credit unions to protect information in specific situations. One specific situation is the proper capturing – and disposal of information. It is often this situation, and the role of credit union partners and administrators, that puts a credit union at risk for a data breach.  Let’s take a look at the guidelines and the opportunity for risk.

The proper disposal of information requirements in the Security Guidelines applies to any personal information a credit union obtains about an individual. But those requirements also extend to a credit union’s providers. A credit union must require its service providers that have access to consumer information to develop appropriate measures for the proper disposal of the information, regardless of whether a loan is ultimately secured. In essence, if a dealership provides credit information to a potential lender, that information must be disposed of properly whether the loan is completed or not. How often do you assess the information disposal practices of your partners?

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Is Your Auto Loan Affordable?

Brien Joyce Vice President EFG Companies
Contributing Author:
Brien Joyce
Vice President
EFG Companies

According to a recent study from Bankrate.com, the average new-car price tag is too high for the majority of medium-income U.S. households. Here’s the breakdown:

In May, Kelley Blue Book updated the average new-vehicle transaction price to $33,261.

Using that transaction price, Bankrate applied the traditional 20-4-10 rule to conduct the study – i.e.:

  • a down payment of 20 percent
  • a four-year loan
  • principal, interest and insurance payments accounting for 10 percent of the household’s gross income

From looking at your own portfolios, you probably know that the majority of American consumers don’t put 20 percent down on their vehicle, and they are often financing for upwards of seven years. The fact that consumers don’t use the 20-4-10 rule should give you a good picture of the state of American finances in comparison to vehicle prices.

It should come as no surprise that Bankrate’s study came back showing that only one metro area could afford the average-priced new vehicle – Washington, D.C., where the median income is nearly $100,000.

Despite the fact that, according to Bankrate, most households can’t afford to purchase a new vehicle, new unit sales are still on par with last year’s levels. The most recent LMC Automotive/J.D. Power forecast puts 2017 new vehicle sales volume in the low 17 million-unit range for the year.