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of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum
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As we reflect on the challenges the pandemic forced on the automotive finance market, there is no doubt the industry remained resilient, all things considered. That’s not to say there weren’t some impacts, which become even more noticeable as we look at Q2 2021 data. Because of the industry's quick pivot to ensure forward momentum, we know the year was somewhat of an anomaly. One example was manufacturer incentives to bring people back into showrooms, which caused interest rates, loan terms and consumer preferences to shift significantly. Now, we see these things leveling out, so rather than comparing directly to an anomalous quarter, it’s helpful to compare to Q2 2019 to provide better context. For example, the average new vehicle loan amount dropped year-over-year, which isn’t something we typically see. However, we know that last year, in Q2 2020 we saw consumers finance more full-size pickup trucks, likely due to strong incentives, which drove up the average loan amount. In Q2 2021, the average new vehicle loan amount was $35,163, down from $36,121 in Q2 2020, and up from Q2 2019, when the average new vehicle loan amount was $32,345. We see a similar trend in average new vehicle loan terms, which was 69.36 months in Q2 2021, down from 71.31 in Q2 2020, but still up slightly from Q2 2019, when the average was 68.84 months. Average interest rate saw a significant drop last year as well, from Q2 2019 to Q2 2020, from 5.7% to 3.95% year-over-year. In Q2 2021, we see it come back up slightly, at 4.09%. Ultimately, the decrease in average term and increase in average loan rate drove average payments up slightly year-over-year, which clocked in at $575 in Q2 2021, up from $570 in Q2 2020 and $555 in Q2 2019. Loan term distribution is another area we’re seeing return to a more normal range. In Q2 2020, as part of incentive packages, we saw a notable increase in the percentage of loans falling into the 73-84 month category, with these terms making up 33.77% of new vehicle loans, compared to 30.28% in Q2 2019. We saw this level back out, coming in at 31.72% of loans in Q2 2021. While the industry proved resilient at navigating last year’s challenges, it is encouraging to see things begin to level out to pre-pandemic levels. As we continue to manage current challenges, like the microchip shortage, understanding the full context of data will likely require comparisons that go beyond year-over-year for a more useful baseline of market performance. To learn more, and see deeper comparisons to 2019, watch the full webinar: State of the Automotive Finance Market: Q2 2021.
The collections landscape is changing as a result of new and upcoming legislation and increased expectations from consumers. Because of this, businesses are looking to create more effective, consumer-focused collections processes while remaining within regulatory guidelines. Our latest tip sheet has insights that can help businesses and agencies optimize their collections efforts and remain compliant, including: Start with the best data Keep pace with changing regulations Focus on agility Pick the right partner Download the tip sheet to learn how to maximize your collections efforts while reducing costs, avoiding reputational damage and fines, and improving overall engagement. Download tip sheet
As last year’s high-volume mortgage environment wanes, lenders are shifting focus to address another set of challenges. Continued economic uncertainty lingers as consumers navigate towards recovery. As such, mortgage lenders have less clarity than normal to assess risk and measure performance in their servicing portfolios. On top of that, more lenders are struggling with customer retention than ever before, due to a historically low rate environment in 2020. These combined factors create a new set of challenges servicers will face in the coming months. We explore a few of these challenges below. An incomplete picture of risk The CARES Act accommodation reporting structure has made it challenging for servicing teams to fully understand the impact of forbearance in their portfolios. If looking only at a CARES Act accommodated borrower’s credit profile, there is no indication whether that consumer would otherwise be delinquent or headed towards default. In turn, lenders cannot model out risk based on this information alone. Borrowers’ financial situations can still change rapidly, and some are still struggling to regain their financial footing. Property data also plays a part in a holistic view of risk. Partly due to lack of housing inventory, home equity continues to rise in many areas of the country, yet there is still uncertainty around whether prices are overinflated, whether the market will correct itself and by how much, and the impact the foreclosure moratorium may have on one’s portfolio. And property dynamics continue to change due to consumer migration stemming from the onset of virtual or hybrid work environments, where homeowners are less bound geographically to a place of work. Being able to have insight into a holistic view of risk is critical to navigating the upcoming months in mortgage servicing. Low borrower retention 2020’s prevailing low-rate environment continues to persist well into 2021 creating a big challenge for mortgage servicers in terms of borrower retention. Borrowers continue to be incentivized to refinance, and in some instances multiple times, to capture the savings throughout the life of their mortgage. Every time a borrower refinances, the lender who’s servicing the loan risks losing the borrower to another lender. This portfolio runoff can create losses for the lender; high portfolio run off rates have shown to negatively impact portfolio performance and investor credibility while increasing marketing cost for new customer acquisition. In our Mortgage in 2021 webinar, we point to the sheer magnitude of this – at the end of 2020, a whopping 33% of first mortgages were less than a year old. Additionally, with the uptick in the number of fintech mortgage lenders and aggregation websites, it has become increasingly easy for consumers to shop for alternative options. Being able to predict the consumers likely to refinance can help servicers retain existing customers and reduce losses. Lack of operational efficiency Lenders and servicers had to increase the capacity of their systems, oftentimes at the turn of a dime, due to last year’s record-breaking origination volumes. This led to massive growing pains while simultaneously stress-testing a company’s systems and processes. As a result, the overall cost to produce a mortgage has risen. Borrower data hygiene poses a challenge for many servicers as well. There was a lot of movement in 2020 in terms of mergers and acquisitions which may also affect servicers’ operational efficiency. Marrying several disparate data points during such events can lead to borrower data inconsistencies and duplicates across loan origination systems. And as consumers come out of forbearance or deferral status, servicers are managing more calls to their inbound call centers, increasing the scope of the problem. Having tools to ensure data accuracy and correct consumer contact information can help reduce operating cost. Conclusion There certainly is a lot of pressure on servicers to optimize and be in a position to efficiently help homeowners in need as forbearance and foreclosure moratoriums end. But with the right data, insights and partners, mortgage servicers can navigate these challenges all while managing risk and enabling the business to grow safely. In our next blog, we highlight what forward-thinking lenders and servicers are focusing on now to navigate the upcoming months in mortgage servicing. Learn more
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With the National Automobile Dealers Association (NADA) Show set to kickoff later this week, it seemed fitting to explore how the shifting dynamics of the used vehicle market might impact dealers and buyers over the coming year. Shedding light on some of the registration and finance trends, as well as purchasing behaviors, can help dealers and manufacturers stay ahead of the curve. And just like that, the Special Report: Automotive Consumer Trends Report was born. As I was sifting through the data, one of the trends that stood out to me was the neck-and-neck race between Millennials and Gen X for supremacy in the used vehicle market. Five years ago, in 2019, Millennials were responsible for 33.3% of used retail registrations, followed by Gen X (29.5%) and Baby Boomers (26.8%). Since then, Baby Boomers have gradually fallen off, and Gen X continues to close the already minuscule gap. Through October 2024, Millennials accounted for 31.6%, while Gen X accounted for 30.4%. But trends can turn on a dime if the last year offers any indication. Over the last rolling 12 months (October 2023-October 2024), Gen X (31.4%) accounted for the majority of used vehicle registrations compared to Millennials (30.9%). Of course, the data is still close, and what 2025 holds is anyone’s guess, but understanding even the smallest changes in market share and consumer purchasing behaviors can help dealers and manufacturers adapt and navigate the road ahead. Although there are similarities between Millennials and Gen X, there are drastic differences, including motivations and preferences. Dealers and manufacturers should engage them on a generational level. What are they buying? Some of the data might not come as a surprise but it’s a good reminder that consumers are in different phases of life, meaning priorities change. Over the last rolling 12 months, Millennials over-indexed on used vans, accounting for more than one-third of registrations. Meanwhile, Gen X over-indexed on used trucks, making up nearly one-third of registrations, and Gen Z over-indexed on cars (accounting for 17.1% of used car registrations compared to 14.6% of overall used vehicle registrations). This isn’t surprising. Many Millennials have young families and may need extra space and functionality, while Gen Xers might prefer the versatility of the pickup truck—the ability to use it for work and personal use. On the other hand, Gen Zers are still early in their careers and gravitate towards the affordability and efficiency of smaller cars. Interestingly, although used electric vehicles only make up a small portion of used retail registrations (less than 1%), Millennials made up nearly 40% over the last rolling 12 months, followed by Gen X (32.2%) and Baby Boomers (15.8%). The market at a bird’s eye view Pulling back a bit on the used vehicle landscape, over the last rolling 12 months, CUVs/SUVs (38.9%) and cars (36.6%) accounted for the majority of used retail registrations. And nearly nine-in-ten used registrations were non-luxury vehicles. What’s more, ICE vehicles made up 88.5% of used retail registrations over the same period, while alternative-fuel vehicles (not including BEVs) made up 10.7% and electric vehicles made up 0.8%. At the finance level, we’re seeing the market shift ever so slightly. Since the beginning of the pandemic, one of the constant narratives in the industry has been the rising cost of owning a vehicle, both new and used. And while the average loan amount for a used non-luxury vehicle has gone up over the past five years, we’re seeing a gradual decline since 2022. In 2019, the average loan amount was $22,636 and spiked $29,983 in 2022. In 2024, the average loan amount reached $28,895. Much of the decline in average loan amounts can be attributed to the resurgence of new vehicle inventory, which has resulted in lower used values. With new leasing climbing over the past several quarters, we may see more late-model used inventory hit the market in the next few years, which will most certainly impact used financing. The used market moving forward Relying on historical data and trends can help dealers and manufacturers prepare and navigate the road ahead. Used vehicles will always fit the need for shoppers looking for their next vehicle; understanding some market trends will help ensure dealers and manufacturers can be at the forefront of helping those shoppers. For more information on the Special Report: Automotive Consumer Trends Report, visit Experian booth #627 at the NADA Show in New Orleans, January 23-26.
The automotive industry is constantly changing. Shifting consumer demands and preferences, as well as dynamic economic factors, make the need for data-driven insights more important than ever. As we head into the National Automobile Dealers Association (NADA) Show this week, we wanted to explore some of the trends in the used vehicle market in our Special Report: State of the Automotive Finance Market Report. Packed with valuable insights and the latest trends, we’ll take a deep dive into the multi-faceted used vehicle market and better understand how consumers are financing used vehicles. 9+ model years grow Although late-model vehicles tend to represent much of the used vehicle finance market, we were surprised by the gradual growth of 9+ model year (MY) vehicles. In 2019, 9+MY vehicles accounted for 26.6% of the used vehicle sales. Since then, we’ve seen year-over-year growth, culminating with 9+MY vehicles making up a little more than 30% of used vehicle sales in 2024. Perhaps more interesting though, is who is financing these vehicles. Five years ago, prime and super prime borrowers represented 42.5% of 9+MY vehicles, however, in 2024, those consumers accounted for nearly 54% of 9+MY originations. Among the more popular 9+MY segments, CUVs and SUVs comprised 36.9% of sales in 2024, up from 35.2% in 2023, while cars went from 44.3% to 42.9% year-over-year and pickup trucks decreased from 15.9% to 15.6%. 2024 highlights by used vehicle age group To get a better sense of the overall used market, the segments were broken down into three age groups—9+MY, 4-8MY, and current +3MY—and to no surprise, the finance attributes vary widely. While we’ve seen the return of new vehicle inventory drive used vehicle values lower, it could be a sign that consumers are continuing to seek out affordable options that fit their lifestyle. In fact, the average loan amount for a 9+MY vehicle was $19,376 in 2024, compared to $24,198 for a vehicle between 4-8 years old and $32,381 for +3MY vehicle. Plus, more than 55% of 9+MY vehicles have monthly payments under $400. That’s not an insignificant number for people shopping with the monthly payment in mind. In 2024, the average monthly payment for a used vehicle that falls under current+3MY was $608. Meanwhile, 4-8MY vehicles came in at an average monthly payment of $498, and 9+MY vehicles had a $431 monthly payment. Taking a deeper dive into average loan amounts based on specific vehicle types—as of 2024, current +3MY cars came in at $28,721, followed by CUVs/SUVs ($31,589) and pickup trucks ($40,618). As for 4-8MY vehicles, cars came in with a loan amount of $22,013, CUVs/SUVs were at $23,133, and pickup trucks at $31,114. Used 9+MY cars had a loan amount of $19,506, CUVs/SUVs came in at $17,350, and pickup trucks at $22,369. With interest rates remaining top of mind for most consumers as we’ve seen them increase in recent years, understanding the growth from 2019-2024 can give a holistic picture of how the market has shifted over time. For instance, the average interest rate for a used current+3MY vehicle was 8.0% in 2019 and grew to 10.2% in 2024, the average rate for a 4-8MY vehicle went from 10.3% to 12.9%, and the average rate for a 9+MY vehicle increased from 11.4% to 13.8% in the same time frame. Looking ahead to the used vehicle market It’s important for automotive professionals to understand and leverage the data of the used market as it can provide valuable insights into trending consumer behavior and pricing patterns. While we don’t exactly know where the market will stand in a few years—adapting strategies based on historical data and anticipating shifts can help professionals better prepare for both challenges and opportunities in the future. As used vehicles remain a staple piece of the automotive industry, making informed decisions and optimizing inventory management will ensure agility as the market continues to shift. For more information, visit us at the Experian booth (#627) during the NADA Show in New Orleans from January 23-26.
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typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.