Prime borrowers opting to finance older used vehicles

Prime consumers are increasingly turning to older used vehicles for lower monthly payments as affordability remains a priority. In 2024, 30.2% of used-car sales were vehicles aged 9 years or older, up from 29.9% in 2023 and 26.6% in 2019, according to a Jan. 21 Experian report. Though all credit segments have shifted to purchasing older vehicles, super prime and prime consumers have increasingly shifted to this vehicle segment, according to the report. In 2024, 53.7% of 9-plus year-old used vehicle originations were from super prime or prime borrowers, up from 42.5% in 2019, according to the report. Consumers are choosing to finance older vehicles to secure monthly payments comparable to 2019, Melinda Zabritski , head of automotive financial insights at Experian, told Auto Finance News . American Honda saw a 4% year-over-year increase in sales of 6- to-10-year-old certified pre-owned vehicles for 2024, Dan Rodriguez , director of auto remarketing at American Honda Motor Co ., told AFN . "We're just scratching the surface with that [segment],” Rodriguez said. “We think there's a lot of opportunity there." In a similar trend, consumers are increasingly opting for 1 - to – 5-year-old used vehicles under $20,000, though options in that segment are limited . Over 55% of payments under $400 The average monthly payment for a vehicle 9 years old or older was $431 in 2024, compared to $498 for 4- to 8-year-old vehicles and $608 for vehicles up to 3 years old, according to Experian. Monthly payments declined across all segments, with the newer vehicle segments seeing the largest drop, though prices fell minimally across the board. For example, payments on vehicles 9-plus years old declined by $1 YoY, while payments on cars 4 - to 8 years old declined $8 YoY, and payments for cars up to 3 years old fell $14 YoY, according to the report. Additionally, 55.1% of used vehicles 9 years old or older had monthly payments less than $400 in 2024, compared to 35.9% in the 4- to 8-year-old segment and 18.7% in the up to 3 three- years old segment, according to the report. Average loan amounts were also lower for older vehicles, at $19,376 for 9-plus years old models, down 1.4% YoY, $24,198 for 4- to 8-year-old models, down 3.3% YoY ; and $32,381 for models up to 3 years old, down 3.6% YoY, according to the report. “Even in your prime and your super prime areas, consumers are also looking for affordability,” Zabritski said. "You look at the monthly payments in that super prime and prime area , on the used side and it can be $600 to $700 , so you are having to increasingly go to older vehicles to balance out those payments.” Older models credit performance strong The credit performance of used vehicles 9-plus years old exceeds the 4- to 8-year-old segment and is nearly on par with the 3-year-old segment, according to the report. As of November 2024, the 60-plus day delinquency rate for auto loans originated from 2015 onward was, according to the report: 2.89% for up to 3-year-old vehicles; 3.69% for 4- to 8-year-old vehicles; and 2.99% for 9-plus-year-old vehicles. However, the segment including vehicles 9 years old or older outperformed nearly every risk tier. The 60-plus day delinquency rates in the subprime category, according to the report were: 9.03% for the up to 3-year-old vehicles. 8.69% for the 4- to 8-year-old vehicles; and 6.31% for 9-plus year-old vehicles. On the prime side, 60-plus day delinquencies were as follows: 1.44% for up to 3-year-old vehicles. 1.56% for 4- to 8-year-old vehicles; and 1.26% 9-plus year-old vehicles. Lower monthly payments and a higher share of higher-credit consumers choosing older used vehicles make older used vehicle loans less risky, Zabritski said. “No matter what analysis you do, it's always the higher the monthly payment, the higher the likelihood of delinquency across all the risk tiers,” she said. “By shifting down into these lower monthly payments , across all risk tiers, you see improvement in performance.” — Additional reporting by Amanda Harris Auto Finance Summit East 2025 is set for May 12-14 at the JW Marriott Nashville featuring fireside chats with Santander Consumer USA and Chase Auto. Visit autofinance.live for more information. Early-bird registration is available here .

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