Customers with credit scores of 661 and above opted for used vehicles last quarter in the highest numbers since 2009, according to credit bureau Experian.
More than half of financed used cars in the fourth quarter of 2019 were originated by consumers in top credit tiers, the company said in its quarterly State of the Automotive Finance Market Report. Superprime customers, which Experian pegs as those with FICO scores between 781 and 850, experienced the highest year-over-year uptick, swelling 74 basis points to comprise more than 13 percent of used-car originations.
Melinda Zabritski, Experian’s senior director of automotive financial solutions, said that while customer preference toward larger vehicles continues to drive up new-vehicle prices, many find the same coveted features and body styles on used-car lots.
“Consumers have been increasingly aware of their financial health, and the increase in used financing is a signal they’re keeping this in mind when shopping for a vehicle,” Zabritski said in a statement.
Other highlights of the report include:
- Total open automotive loan balances hit $ 1.229 trillion.
- The gap between used-car and new-car financing widened as loan amounts climbed for both. The average new-vehicle loan amount reached $ 32,797 during the quarter, up 3.4 percent from the same quarter in 2018, while the average used loan jumped to $ 20,554, up 2.4 percent.
- New financing increased as well, particularly among prime consumers, who made up nearly three-fourths of new-car financing in the quarter.
- Interest rates charged on vehicle financing fell, aided by cuts in the federal benchmark interest rate in 2019.
