2026 marks the fifth consecutive year of heightened stress in U.S. auto lending, with credit unions experiencing near decade highs in auto loan delinquencies.
That pressure typically pushes credit unions toward tighter underwriting. But delinquency at credit unions is increasingly a payment experience problem and you can’t underwrite your way out of that. Increasingly, leading lenders are recognizing that improving repayment outcomes requires a more intentional approach to payment experience management—reducing friction, recovering failed payments and making it easier for members to pay successfully in the moments that matter most.
Core platforms typically aren’t built to distinguish between the three types of missed payments behind every delinquency report: members who can’t pay (a hardship conversation), members who won’t pay (a collections conversation), and members who tried to pay, but hit friction and abandoned the payment (a recovery conversation). The first two are visible on a 30-day past-due report. The third is invisible, and most credit unions have no idea how big it is until they start tracking payment abandonment.
Once you can see all three, you can begin managing the payment experience more proactively by identifying friction points, recovering abandoned payments and reducing avoidable delinquencies before they escalate. Start here:
- Track payment abandonment rates. Most core platforms are built for the “happy path,” which is the ideal scenario where a member logs in, the payment method works and the payment posts on time. When it comes to loan repayments, however, sometimes things go wrong. Cards expire and the payment fails. Members forget their logins and can’t access the digital banking portal. The digital wallet they use every day isn’t supported. They get distracted mid-payment and don’t return to complete it. Each of these scenarios results in an abandoned payment, which most credit unions aren’t tracking.
E-commerce platforms are notorious for tracking cart abandonment as a routine metric. There’s no reason credit unions shouldn’t treat payment abandonment the same way. Credit unions should look for payment technologies that surface payment abandonment data so you can intervene before these missed payments age into delinquencies, including technologies that eliminate login barriers entirely, since login friction is one of the most common reasons members abandon a payment mid-flow.
- Recover failed payments before they become delinquencies. Most credit unions respond to auto loan repayment failures with a generic error message, “Your payment failed. Please try again.” Consider what your members encounter with nearly every other self-service transaction they make. A failed payment in a rideshare or food delivery app, for example, surfaces an alternative funding source on the next screen, and the payment completes in a few taps. Your credit union members expect a similar experience when repaying their auto loans.
The right alternative isn’t the same for every member, and what works for your current member base isn’t always what works for the next generation. Gen X, your core auto loan cohort today, leads all generations in digital wallet adoption, yet 52% say they feel overwhelmed when presented with several payment options at once. Among Gen Z, your emerging member base, 47% say a stored mobile wallet balance would make it easier to pay loans on time, an option many credit unions don’t yet enable for their members.
Look for a guest pay platform that uses each member’s payment history to intelligently surface the method most likely to succeed at that moment. For instance, when a card on file fails and the system knows the member has paid successfully with Venmo before, the next screen should surface Venmo, not a generic error message. PayNearMe platform data shows this kind of in-the-moment recovery and turns approximately 9% of failed payments into completions, all within the self-service channel. That’s hundreds of would-be delinquencies recovered before they ever show up on a past-due report.
- Re-engage members before their abandoned payments become delinquencies. Not every missed payment starts with an inability to pay. Sometimes a member begins the payment process, gets pulled away and never returns to finish it. These are not failed payments, the payment method was never the problem. These members started the process, got pulled away, and never returned to finish. Without a nudge to come back, those abandoned payments quietly turn into past-due notices 30 days later.
That’s where member re-engagement comes in. A modern guest pay platform detects the abandonment and nudges the member back with a timely, personalized text or email. A one-tap link opens directly into the payment flow, the amount due is already populated, and saved payment methods are surfaced so the member can complete the payment in a few taps.
More than half of Gen Z members (51%) say a text reminder would help them pay on time. Nearly 4 in 5 Millennials (79%) want a personalized link with pre-populated payment details that lets them avoid the login process entirely. Among Baby Boomers, who often struggle with entering payment information on their phones, 77% say having their payment details pre-populated would help.
Give members that experience and the recovery follows. When credit unions re-engage members, 50% return to the payment flow and 7% complete the payment, meaning a meaningful share of what would have become 30-day past-dues never appear on a delinquency report.
- Let members safely ask family or friends for help with a payment. Members who ask family or friends for help with a loan payment aren’t just covering this month’s bill; they’re telling you something about next month’s, too. The behavior is common: 48% of Americans facing a financial shortfall say they’d ask a family member for money without expecting to pay it back. For credit unions, the act of asking for help is itself a meaningful signal. When a borrower reaches out to a trusted third party to help cover a payment, that often indicates emerging financial distress. If the lender can see that signal, they can work with the member to keep them in good standing.
Yet, most credit unions don’t see these signals because members share their logins over the phone or forward portal links by text. The parent or friend logs in as the member, navigates the payment flow and submits. The payment posts under the member’s name, with no record that anyone else was involved.
Venmo solved the same problem years ago. When friends settle a bill after dinner, no one is handing over a bank login. The friend who picked up the check sends a request. Each friend pays from a separate account, on a separate phone—no logins exposed and no payment details exchanged. With the right payments partner, the same approach can work for auto loans. From inside the payment flow, members trigger a secure, single-use link to a chosen third party. The third party opens the link on a separate phone, pays from a separate funding source and the link expires. Nothing shared, nothing saved and the credit union sees the whole transaction, including who actually paid.
That visibility is what turns a payments feature into an early-warning channel. Captured by the system, the moment a member asks for help becomes the credit union’s chance to step in with something useful: a due-date change, a workout conversation, a short-term modification. Safely enabling third-party help recovers a payment that might have been missed and gives the credit union the cue to act before the next one becomes a 30-day past-due.
Every credit union should be able to answer four questions:
- What’s your payment abandonment rate?
- When a payment fails, does the next screen surface an alternative payment method, or just an error message?
- When members walk away from a payment, how fast do you reach back out?
- When members need help with a payment, can they safely ask a family member or friend?
In 2026, delinquency at credit unions is as much a payment experience problem as a credit problem. Your answers will show you where to start.
About the Author
Matt Disbrow is the Director of Business Development at PayNearMe, where he focuses on driving strategic partnerships and expanding the company’s reach in the payments industry. With over two decades of experience, Matt is a results-driven leader passionate about helping businesses optimize their payment processes.