Auto loan data reveals some interesting insights into how consumers of different ages tend to finance their vehicles. Experian analyzed its consumer debt data to see how the number of car loans, average loan costs and missed payments vary across generations.
A notable trend is that US consumers born between 1965 and 1980 are more likely to have multiple car loans. These Generation X vehicle owners also spend the most on average on monthly car bills compared to other age groups. And whether it’s a pickup truck or a luxury convertible, data suggests that the older the vehicle owner, the less likely they are to make payments.
This pattern may also correspond to what is known about the differences in wealth constructed by different generations. At the start of 2022, millennials still lag behind the levels of wealth accumulated by Gen Xers and baby boomers when they were at the same points in their lives, according to Data of the Federal Reserve Bank of St. Louis.
Gen Z and millennials, more likely than older generations to have only one car loan, saw their average monthly payments increase the most of any generation year-over-year in 2022. Gen Z are between the ages of 9 and 25, and it’s too early to tell what the financial habits of the adult consumers in the group, aged 18 to 25, will look like. According to Experian’s most recent data on car loans, young Americans are more likely to borrow money for the purchase of their car than any other generation. They are also more likely to have trouble making car payments.
Of course, car owners of all ages have seen the cost of new vehicles to skyrocket since spring 2021, triggered by an increase in demand amid computer chip shortages and other supply chain constraints. But even before the pandemic, sticker prices had been steadily rising. At the end of the first quarter of 2013, the average cost of a new car was $31,526; in the first quarter of 2022, it had climbed to $45,927, according to Kelley Blue Book.
As prices have risen, loan terms have become longer than ever, which has also played a role in changing car loan habits. Read on to see how these trends have shaped the financial landscape of American car owners across generations.