Car Loan Trends

Car Loans by Generation

It turns out that today’s car loan landscape looks quite different depending on which generation is in the driver’s seat. Recent insights from Caribou, an auto refinancing company, offer a peek into just how varied the average car loan details can be across generations. These findings from 2024 reveal that baby boomers, Gen X, millennials, and Gen Z approach car loans with surprisingly diverse perspectives and financial backgrounds.

Breaking Down the Numbers

The average monthly car payment stands at a considerable $742 for new rides and $545 for used vehicles, according to Experian’s stats. But diving into the generational breakdown, Caribou notes some fascinating trends. Millennials carry the heftiest loan balances, averaging a whopping $38,600. Meanwhile, Gen Z, those born between 1997 and 2012, might have the smallest monthly income portion reserved for car payments, but they face a higher annual percentage rate (APR) of around 14.05% for models like the Honda Civic. This makes their financial management an intriguing challenge.

Millennials lean heavily on the Chevrolet Silverado 1500, with loans infused with a slightly lighter 12.44% APR. Gen X, likely nostalgic for the classic pickups, often opt for larger trucks like the Ford F-150. Baby boomers, on the other hand, boast the highest average credit score of 735, allowing them more favorable lending terms. Their loans average $35,844 and feature the lowest APR of 11.91%, which aligns with their financial savvy.

Refinancing Benefits

Refinancing emerges as a game-changer for many. Caribou’s analysis showcases how different generations approach refinancing, potentially unlocking avenues for cost savings. Gen Xers triumph in this arena, realizing an average monthly saving of $147 post-refinance. Millennials aren’t far behind, cushioning their budgets with $143 in savings. Even baby boomers and Gen Z save a notable $131 and $126, respectively, each month. Refinancing rates brought the APR down significantly, with top reductions spanning between 3.51 to 5.56 percentage points.

Refinancing offers an inviting reprieve from the strict confines of dealership loans, debuting as a potent tool for trimming down car expenses. It’s no wonder that Caribou’s CEO, Simon Goodall, fervently advocates for the practice, suggesting that it is not just a trendy advice but an essential pivot for households stretched by financial demands.

Smooth Rides Ahead

Ultimately, understanding how these loan characteristics trickle through generations can refine financial strategies. While Gen Z contends with affordability challenges and baby boomers revel in favorable lending terms, what’s evident is the sheer adaptability across the board, marking a consumer-driven evolution in handling car loans. The experiences and loan tactics are as varied as the vehicles preferred—whether a Civic, a Silverado, or a formidable F-150.