Younger Buyers Return to the Auto Loan Market
May 25th, 2016 @ 11:56 AM by Amber Nelson
Although the Great Recession may have kept many Millennials from buying cars for several years, today those younger consumers are returning to the auto loan market in ever-increasing numbers, according to data from LendingTree.
During the past year, 34 percent of all auto loan requests have come from Millennials – those aged 18 to 34 – an increase of 7 percent over the past three years. The average auto loan amount for those borrowers was $14,825.34; bowers older than 35 had an average loan amount of $17,938.74. “With unemployment among millennials improving, coupled with lower interest rates and low gas prices, the share of millennial auto loan requests is on the rise,” said Doug Lebda, founder and CEO of LendingTree. “Although the share of millennial auto loan requests is relatively lower in densely populated urban areas, the auto market appears to be enticing aging millennials.”
Lending Tree also analyzed Millennial auto loan requests geographically. The city that had the highest percentage of younger buyers was Memphis, Tenn. with 41.98 percent of all loan borrowers falling in that category. Milwaukee, Wis. was a close second with a 40.68 percent market share of Millennial borrowers. Number three was St. Louis, Mo. where younger buyers made up 37.88 percent of all auto loan borrowers.
Areas where Millennials are still not making a big splash in the auto market include the Hartford, Conn. region with just 22.91 percent and the Las Vegas, Nev. area with 26.09 percent. Perhaps part of the reason for the low younger-buyer turnout is that the loan price tags in those areas tend to be much higher than the national average. In Hartford, the average loan amount for borrowers under 35 was $18,112.22 while in Las Vegas the average amount was $23,328.71.
New cars are favored by Millenials by a small margin, according to LendingTree. Of all car loan requests to younger buyers, 53.6 percent were for new cars versus 46.4 percent for used vehicles.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.