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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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Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for ‘lorem ipsum’ will uncover many web sites still in their infancy.
Marketers are keenly aware of how important it is to “Know thy customer.” Yet customer knowledge isn’t restricted to the marketing-savvy. It’s also essential to credit risk managers and model developers. Identifying and separating customers into distinct groups based on various types of behavior is foundational to building effective custom models. This integral part of custom model development is known as segmentation analysis. Segmentation is the process of dividing customers or prospects into groupings based on similar behaviors such as length of time as a customer or payment patterns like credit card revolvers versus transactors. The more similar or homogeneous the customer grouping, the less variation across the customer segments are included in each segment’s custom model development. So how many scorecards are needed to aptly score and mitigate credit risk? There are several general principles we’ve learned over the course of developing hundreds of models that help determine whether multiple scorecards are warranted and, if so, how many. A robust segmentation analysis contains two components. The first is the generation of potential segments, and the second is the evaluation of such segments. Here I’ll discuss the generation of potential segments within a segmentation scheme. A second blog post will continue with a discussion on evaluation of such segments. When generating a customer segmentation scheme, several approaches are worth considering: heuristic, empirical and combined. A heuristic approach considers business learnings obtained through trial and error or experimental design. Portfolio managers will have insight on how segments of their portfolio behave differently that can and often should be included within a segmentation analysis. An empirical approach is data-driven and involves the use of quantitative techniques to evaluate potential customer segmentation splits. During this approach, statistical analysis is performed to identify forms of behavior across the customer population. Different interactive behavior for different segments of the overall population will correspond to different predictive patterns for these predictor variables, signifying that separate segment scorecards will be beneficial. Finally, a combination of heuristic and empirical approaches considers both the business needs and data-driven results. Once the set of potential customer segments has been identified, the next step in a segmentation analysis is the evaluation of those segments. Stay tuned as we look further into this topic. Learn more about how Experian Decision Analytics can help you with your segmentation or custom model development needs.
On May 11, 2018, financial institutions will be required to perform Customer Due Diligence routines for their legal entity customers, such as a corporation or limited liability company. Here are 3 facts that you should know about this upcoming rule: When validating ownership, financial institutions can accept what customers have provided unless they have a reason to believe otherwise. Some possible trigger events requiring review of beneficial ownership information for existing accounts include: change in ownership and law enforcement warrants or subpoenas. When collecting and updating beneficial ownership information, the financial institution must retain the original and updated information. While financial institutions are required to collect the same basic customer identification program information from business owners that is required from consumer customers, your current policies may not satisfy this new rule. Learn more
In the credit game, the space is deep and diverse. From super prime to prime to subprime consumers, there is much to be learned about how different segments are utilizing credit and navigating the financial services arena. With 78 percent of full-time workers saying they live paycheck-to-paycheck and 71 percent of U.S. workers responding that they live in debt, it is not surprising a sudden life event can plunge a solid credit consumer from prime to subprime within months. Think lost job, divorce or unexpected medical bill. This population is not going away, and they are seeking ways to make ends meet and obtain finances for needs big and small. In many instances, alternative credit data can shed a light on new opportunities for traditional lenders, fintech players and those in the alternative financial space when servicing this specific consumer segment. In a new study, Clarity analyzed the trends and financial behavior of subprime loan users by looking at application and loan data in Clarity’s database, as well as overlaying VantageScore® credit score insights from Experian from 2013 to 2017. Clarity conducted this subprime trends report last year, but this is the first time it factored in VantageScore® credit score data, providing a different lens as to where consumers fall within the credit score tiers. Among the study highlights: Storefront single pay loan customers are becoming more comfortable with applying for online loans, with a growing percentage seeking installment products. For the first time in five years, online single pay lending (payday) saw a reduction in total credit utilization per customer. Online installment, on the other hand, saw an increase. While the number of online installment loans increased by 12 percent and the number of borrowers by only 9 percent, the dollar value grew by 30 percent. Online installment lenders had the greatest percentage increase in average loan amount. California and Texas remain the most significant markets for online lenders, ranking first and second for five years in a row due to population size. There has also been growth in the Midwest. The in-depth report additionally delves into demographics, indicators of financial stability among the subprime market and comparisons between storefront and online product use and performance. “Every year, there are more financial lenders and products emerging to serve this population,” said Andy Sheehan, president of Clarity Services. “It’s important to understand the trends and data associated with these individuals and how they are maneuvering throughout the credit spectrum. As we know, it is often not a linear journey.” The inclusion of the VantageScore® credit score showcased additional findings around prime versus subprime financial behaviors and looks at generational trends. Access Full Report
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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.