Consumers In The US Borrowed More For Longer Periods To Buy Suvs And Trucks

A new Experian study of auto credit market trends shows that consumers in the United States borrowed more money for longer periods in the first quarter of the current year in order to be able to purchase and drive the more expensive trucks and sport utility vehicles.

The study also found that the consumers who financed new and used vehicles during the first quarter had higher average credit scores while their delinquency rates are lower at the same time. That indicated that the auto credit market on the overall was quite healthy. Experian is an information services company and it is engaged in gathering data on consumer and business credit and generates credit scores, among other services.

“Consumers are increasingly purchasing SUVs, CUVs and pickups. It’s driving loan amounts up and payments up,” said Melinda Zabritski, Experian’s senior director of automotive financial solutions. The auto industry used CUV is an acronym for car-like, crossover utility vehicles such as the Toyota RAV4, which has been a best seller in this category.

Experian said that during the first quarter, there was a rise in the average credit scores for new and used vehicle buyers while a prime level credit rating of 663 is now accorded to the average used car buyer. The report also noted that the US, the share of consumers with sub-prime credit scores dropped to a new record low of just over 17%.

SUVs accounted for more than 56 per cent of the new vehicles that were purchased through financing in the first three months of 2021 while 17 per cent of them were pickup trucks. In the same period, the average amount financed to buy a new vehicle rose to $35,392 compared to $33,833 for the same quarter a year ago.

The report also noted that 35 per cent of the total loans was accounted for by the new vehicle loans longer that were longer than 72 months while that share was at 32 per cent in the same period a year ago.

Lending for used-vehicles also showed a similar pattern of more borrowed on average for longer periods.

Analysts of auto credit markets were usually concerned in the past if there was a lengthening of loan terms. However the Experian report noted that the proportion of delinquent loans – where borrowers were 60 days behind on payments – dropped during the latest quarter to 0.54 per cent compared to 0.67 per cent for the same period a year ago and was at 0.68 per cent during the first quarter of 2019 – prior to the hit of the Covid-19 pandemic.

“I don’t see anything in the industry itself that would be a cause for alarm,” Zabritski said.

(Adapted from


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