Consumers with Strong Credit Make Up more than 50% of Used Vehicle Financing, According to Experian
The percentage of prime consumers financing used vehicles continues to increase, according to credit bureau Experian’s Q4 2019 State of the Automotive Finance Market Report. With average credit scores increasing among used vehicle finance customers, it’s more important than ever to get your credit score as high as you can.
Experian found that prime consumers opting for used financing surpassed 50 percent—the highest percentage in Q4 since 2009.
Furthermore, used vehicle financing saw the largest growth year-over-year among super prime consumers, from 12.55 percent in Q4 2018 to 13.29 percent in Q4 2019. The trend towards used vehicle financing mirrors previous quarters.
As more financing goes prime, there’s also been a steady increase in average credit scores, with the average credit scores for vehicle loans reaching 719 for new and 661 for used in Q4 2019.
Positive trends for affordability
Overall, the market continues to grow, with total open automotive loan balances reaching $1.229 trillion.
The average loan amount for a vehicle increased in Q4 2019. The average new vehicle loan amount totaled $32,797 during the quarter, while the average used vehicle loan amount reached $20,554.
Despite increases in average loan amounts, delinquency rates stayed relatively flat in Q4 2019, with 30- and 60-day delinquencies at 2.31 percent and 0.79 percent, respectively.
Additionally, while average monthly payments continued to increase, the increases were not as dramatic as historically seen.
In Q4 2019, the average monthly payment for a new vehicle was $554, a $9 year-over-year increase, and the average monthly payment for a used vehicle was $393, up $6 year-over-year.
The more moderate increases in monthly payments were aided by a reduction in average interest rates, which were 5.76 percent for new and 9.49 percent for used in Q4 2019, compared to 6.13 percent and 9.59 percent during the same time last year.
Push Your Credit Score Higher – Go See Your Credit Union Today
What all this data tells us is that consumers need to have good-or-better credit scores to qualify for financing at affordable interest rates.
Your credit union can help you to achieve that higher credit score you need these days. Your CU can help you to set a budget that allows faster pay-down of outstanding debt. Your CU can get you into lower interest rates – including a low-interest loan to consolidate outstanding high-interest credit card balances.
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