Prime Buyers Flock to Used Vehicles in Q2 Report
Experian’s Q2 auto finance report consumers continue to uncover ways to manage monthly payments. For a record percentage of prime borrowers, that meant passing on a $32,000-plus new-vehicle loan in favor of a pre-owned unit.

Outstanding automotive loan balances totaled $1.197 billion in the second quarter, with the percentage of outstanding loan balances held by subprime and deep-subprime consumers remaining below 19%.
Photo courtesy Experian
SCHAUMBURG, Ill. — Affordability continues to remain top-of-mind for most in the automotive industry. However, consumers appear to be making due, according to Experian’s Q2 2019 State of the Automotive Finance Market report, which finds consumers are exploring all available options to make costs more manageable, including extending loan terms and deciding between new or used vehicles.
One of the more notable ways consumers have managed to make their monthly payments more affordable is to opt for used vehicles. In fact, prime and superprime consumers financed used vehicles at record levels — these borrowers comprised more than 57% of used-vehicle financing during the second quarter.
The shift to used vehicles comes as the average loan amounts for vehicles continue to rise.
“In previous years, it was common for most prime borrowers to opt for new vehicles. These vehicles tend to have better warranties and require less upfront maintenance,” said Melinda Zabritski, Experian’s senior director of automotive financial solutions. “But with loan amounts for new and used vehicles on the rise, and a higher volume of vehicles coming off-lease, there are late-model options available that borrowers can consider. It’s important for the industry to keep an eye on these trends to help inform future business decisions.”
The shift to used vehicles comes as the average loan amounts for vehicles continue to rise. Based on the report, the average amount for a new-vehicle loan amount was $32,119, while the average used-vehicle loan amount hit $20,156. Additionally, the average monthly payments were $550 and $392 for new and used, respectively.
Read: Rising Loan Amounts Drive Consumers to the Used-Vehicle Market
The report also found that consumers appear to be managing payments by extending loan terms. The average loan terms for new and used vehicles reached record highs. For new vehicles, the average loan term was 69.17 months, while the average loan term was 64.82 months for used vehicles. The extension of loan terms come as interest rates continue to remain more than 6% for new vehicles and more than 10% for used.
“There are many factors that can impact vehicles costs and car buying decisions, but perhaps the factor that is most critical is a car shopper’s credit score — it can impact interest rates and loan terms, which impacts monthly payments,” Zabritski said. “Prior to heading into the dealership, car shoppers should explore ways to improve their credit standing, such as leveraging new tools and resources available to them, like Experian Boost, that can help increase their score and potentially arrange better terms.”
Some industry pundits continue to be concerned that consumers can’t handle larger payments. However the data tells a different story, analysts said, noting that delinquencies remained stable in Q2 2019. Thirty-day delinquencies dropped to 2.11%, from 2.12% in Q2 2018, while 60-day delinquencies saw a slight increase from 0.64% to 0.65% in the same timeframe.
Originally posted on F&I and Showroom
More Industry

Penske Auto Group Deal a Record
The deal to take the dealership and transportation services company private sets a new pace for industry buy-sell transactions.
Read More →
War Toll a Damper on Used Auto Prices
Cox Automotive found wholesale depreciation to be elevated in September amid high fuel prices and this year's unusual hurricane season.
Read More →
Bridge the Maintenance Gap
With many drivers missing recommended maintenance, service departments offering transparency and efficiency have a better chance of reaching financially strained consumers.
Read More →
California Store Has New Owner
The longtime dealership in the northern part of the state is known for robust fleet sales and has served the state capital for 115 years.
Read More →
BMW Plant Pursues Cleaner Energy
BMW Group Plant Leipzig has utilized hydrogen to help power its production since 2013, but a new pipeline is planned to take it to another level.
Read More →
Auto Affordability Inches Up
The latest Cox Automotive and Moody’s Analytics index shows a slight increase in new-vehicle affordability despite high prices.
Read More →
Ohio Auto Group Under New Ownership
After 79 years with the Schluter family, Mansfield Auto Group has been acquired by Missouri-based Clement Auto Group.
Read More →
RV Group Expands Carolina Footprint
Blue Compass RV Columbia Northeast is the 13th RV dealership owned by Blue Compass in the Carolinas.
Read More →
Agent Acumen
An Agent Summit panel of people who’ve been supporting auto dealers for years gave both timely and timeless advice for those starting out or mulling the prospect.
Read More →
Missed Maintenance Creates Opportunity
As families get back on the road and into daily school routines, service drives have an opportunity to capture customers who are behind on recommended vehicle maintenance.
Read More →