How auto loans compare by generation | Personal Finance
Auto loan data reveals some interesting insights about how consumers of different ages tend to finance their vehicles. Experian analyzed its consumer debt data to look at how the number of auto loans, average loan costs, and missed payments vary across generations.
One notable trend is that U.S. consumers born between 1965 and 1980 are more likely to have multiple auto loans. These Generation X vehicle owners also spend the most on average on monthly car bills compared with other age groups. And whether the vehicle is a workhorse pickup or a luxury convertible, data suggests that the older the vehicle owner is, the less likely they are to be making payments on it.
This pattern may also track with what is known about differences in wealth built by different generations. At the start of 2022, millennials still lagged behind the wealth levels accrued by Gen X and baby boomers when they were at the same points in their lives, according to data from the Federal Reserve Bank of St. Louis.
Generation Z and millennials, more likely than older generations to hold only a single auto loan, saw their average monthly auto payments increase the most of any generation year over year in 2022. Gen Zers are ages 9 to 25, and it’s too early to say how the financial habits of the group’s adult consumers—ages 18 to 25—will look. Younger Americans are more likely to borrow money for their automobile purchase than any other generation, according to the most recent Experian auto loan data. They’re also more likely to struggle with making car payments.
Of course, car owners of all ages have seen the cost of new vehicles skyrocket since spring 2021, triggered by a surge 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 Q1 2013, the average cost of a new car was $31,526; by Q1 2022, it had climbed to $45,927, according to Kelley Blue Book.
As prices have increased, loan terms have been getting longer than ever, which has also played a role in changing auto loan habits. Read on to see how these trends have shaped the financial landscape for U.S. car owners across generations.