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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.
Analysis opportunity for vintage analysis Vintage analysis, specifically vintage pools, present numerous useful opportunities for any firm seeking to further understand the risks within specific portfolios. While most lenders have relatively strong reporting and metrics at hand for their own loan portfolio monitoring…these to understand the specific performance characteristics of their own portfolios — the ability to observe trends and benchmark against similar industry characteristics can enhance their insights significantly. Assuming that a lender possesses the vintage data and vintage analysis capability necessary to perform benchmarking on its portfolio, the next step is defining the specific metrics upon which any comparisons will be made. As mentioned in a previous posting, three aspects of vintage performance are often used to define these points of comparison: Vintage delinquency including charge-off curves, which allows for an understanding of the repayment trends within each pool. Specifically, standard delinquency measures (such as 30+ Days Past Due (DPD), 60+ DPD, 90+ DPD, and charge-off rates) provide measures of early and late stage delinquencies in each pool. Payoff trends, which reflect the pace at which pools are being repaid. While planning for losses through delinquency benchmarking is a critical aspect of this process, so, too, is the ability to understand pre-repayment tendencies and trends. Pre-payment can significantly impact cash-flow modeling and can add insight to interest income estimates and loan duration calculations. As part of the Experian-Oliver Wyman Market Intelligence Reports, these metrics are delivered each quarter, and provide a consistent, static pool base upon which vintage benchmarks can be conducted. Clearly, this is a rather simplified perspective on what can be a very detailed analysis exercise. A properly conducted vintage analysis needs to consider aspects such as: lender portfolio mix at origination; lender portfolio footprint at origination; lender payoff trends and differences from benchmarked industry data in order to properly balance the benchmarked data against the lender portfolio.
By: Kennis Wong When consumers and the media talk about fraud and fraud risk, nine out of ten times they are referring to third-party frauds. When financial institutions or other organizations talk about fraud, fraud best practices, or their efforts to minimize fraud, they usually refer to both first- and third-party frauds. The difference between the two fraud types is huge. Third-party frauds happen when someone impersonates the genuine identity owner to apply for credit or use existing credit. When it’s discovered, the victim, or the genuine identity owner, may have some financial loss — and a whole lot of trouble fixing the mess. Third-party frauds get most of the spotlight in newspaper reporting primarily because of large-scale identity data losses. These data losses may not result in frauds per se, but the perception is that these consumers are now more susceptible to third-party frauds. Financial institutions are getting increasingly sophisticated in using fraud models to detect third-party frauds at acquisition. In a nutshell, these fraud models are detecting frauds by looking at the likelihood of applicants being who they say they are. Institutions bounce the applicants’ identity information off of internal and external data sources such as: credit; known fraud; application; IP; device; employment; business relationship; DDA; demographic; auto; property; and public record. The risk-based approach takes into account the intricate similarities and discrepancies of each piece of data element. In my next blog entry, I’ll discuss first-party fraud.
By: Ken Pruett I find it interesting that the media still focuses all of their attention on identity theft when it comes to credit-related fraud. Don’t get me wrong. This is still a serious problem and is certainly not going away any time soon. But, there are other types of financial fraud that are costing all of us money, indirectly, in the long run. I thought it would be worth mentioning some of these today. Although third party fraud, (which involves someone victimizing a consumer), gets most of the attention, first party fraud (perpetrated by the actual consumer) can be even more costly. “Never pay” and “bust out” are two fraud scenarios that seem to be on the rise and warrant attention when developing a fraud prevention program. Never Pay A growing fraud problem that occurs during the acquisition stage of the customer life cycle is “never pay”. This is also classified as first payment default fraud. Another term we often hear to describe this type of perpetrator is “straight roller”. This type of fraudster is best described as someone who signs up for a product or service — and never makes a payment. This fraud problem occurs when a consumer makes an application for a loan or credit card. The consumer provides true identification information but changes one or two elements (such as the address or social security number). He does this so that he can claim later that he did not apply for the credit. When he’s granted credit, he often makes purchases close to the limit provided on the account. (Why get the 32 inch flat screen TV when the 60 inch is on the next store shelf — when you know you are not going to pay for it anyway?) These fraudsters never make any payments at all on these accounts. The accounts usually end up in collections. Because standard credit risk scores look at long term credit, they often are not effective in predicting this type of fraud. The best approach is to use a fraud model specifically targeted for this issue. Bust Out Fraud Of all the fraud scenarios, bust out fraud is one of the most talked about topics when we meet with credit card companies. This type of fraud occurs during the account management phase of the customer lifecycle. It is characterized by a person obtaining credit, typically a loan or credit card, and maintaining a good credit history with the account holder for a reasonable period of time. Just prior to the bust out point, the fraudster will pay off the majority of the balance, often by using a bad check. She will then run the card up close to the limit again — and then disappear. Losses for this type of fraud are higher than average credit card losses. Losses between 150 to 200 percent of the credit limit are typical. We’ve seen this pattern at numerous credit card institutions across many of their accounts. This is a very difficult type of fraud to prevent. At the time of application, the customer typically looks good from a credit and fraud standpoint. Many companies have some account management tools in place to help prevent this type of fraud, but their systems only have a view into the one account tied to the customer. A best practice for preventing this type of fraud is to use tools that look at all the accounts tied to the consumer — along with other metrics such as recent inquiries. When taking all of these factors into consideration, one can better predict this growing fraud type.
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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.