Credit Unions No Longer Face a Ceiling on Indirect Car Loans From One Servicer. The Old Limits Were 50% and 100% of Net Worth.

The National Credit Union Administration has deleted the rule that limited how much indirect vehicle lending a credit union could take from any one third-party servicer. The removal took effect on September 8, 2026, thirty days after the final rule appeared in the Federal Register.

What the deleted rule required

The provision, 12 CFR 701.21(h), governed loans that a credit union bought or originated through a dealer or other intermediary and then had serviced by a third party. It set two ceilings, both measured against the credit union's own net worth rather than against its assets or its loan book.

• Loans serviced by any single third-party servicer were capped at 50% of the credit union's net worth.
• That ceiling rose to 100% of net worth once the credit union had at least 30 months of experience with that particular servicer.
• A parallel provision at 12 CFR 741.203(c) extended the limits to federally insured, state-chartered credit unions.
• A cross-reference in 12 CFR 746.201(c) has been amended to remove the citation to the deleted rule.

The reasoning the Board gave

The NCUA Board concluded that the restrictions were unduly burdensome and out of step with how the agency now supervises third-party relationships. Rather than a numeric cap set in regulation, the Board said it would rely on existing frameworks covering vendor management, risk oversight and board governance.

A credit union's board is in the best position to develop policies that are appropriately scaled to its activities.

Fourteen parties commented on the proposal. The Federal Register document records that all fourteen supported removing the restrictions, a group that included individual credit unions, state leagues, national trade associations and state supervisory authorities. The agency recorded no opposing comment.

One rule out of eleven

The indirect-lending change is part of a larger package. On August 5, 2026 the NCUA Board approved eleven final rules under what the agency calls its Deregulation Project, aimed at provisions it considers obsolete, duplicative, or guidance that had been written into regulation.

• Surety and guarantor requirements (12 CFR 701.20(c)(3) and 701.20(d))
• Limits on loans to other credit unions (12 CFR 701.25(b))
• Service to underserved areas (IRPS 08-2)
• Community chartering policies (IRPS 10-1)
• Federal corporate credit union chartering (IRPS 11-02)
• Notice of termination of excess insurance coverage (12 CFR 741.5)
• Disclosure of share insurance for non-member shares (12 CFR 741.10)
• Organization and operation of federal credit unions (IRPS 06-1)
• Eligible obligations (12 CFR 701.23)
• Credit union service contracts (12 CFR 701.26)
• Third-party servicing of indirect vehicle loans (12 CFR 701.21(h))

With today's announcement, we are moving forward on our commitment to removing regulations that are obsolete, burdensome, duplicative, or simply guidance that has no place in regulation.

What changes in practice

Indirect vehicle lending is how a large share of credit union auto loans originate: a member arranges financing at a dealership, and the loan is assigned to the credit union, often with a third party handling collections and servicing. The deleted caps limited concentration in that channel by tying it to a hard percentage of net worth. With the caps gone, the concentration a credit union will accept from a single servicer becomes a matter for its own board policy and for examiner judgment under general safety-and-soundness supervision, rather than a bright-line number in the rulebook.