Used car buyers are borrowing more money than ever before and using it to buy older cars.
That’s the conclusion of a new study from LendingTree. Analysts examined anonymized data from 600,000 auto loan inquiries to find that the average amount of financing sought on a 2-year-old vehicle jumped by 28.3% between the second quarters of 2020 and 2021. Users sought to borrow, on average, $5,176 more than they did just one year ago.
Used car prices have been increasing all year, with the average advertised price for a used vehicle recently topping $25,000 for the first time.
The average applicant sought to borrow $23,474 for a 2019 vehicle.
The increase wasn’t universal. Borrowers in Madison, Wisconsin, saw the highest price increases. The average applicant from Madison sought $7,575 more than they had one year ago. At the other end of the scale, applicants in Lakeland, Florida, sought to borrow an average of $9,831 less than one year before.
With used car prices spiking, Americans are looking to save money by buying older cars. The average age of the used vehicle they sought to buy jumped from 5.8 years to 7 years – a 21.1% increase.
That figure, too, varies widely from one part of the country to another. Borrowers in Miami, Florida, want the newest cars. The average Miami borrower applied for financing on a 4.7-year-old vehicle. Borrowers in New Orleans are seeking the oldest cars, with an average age of 16.2 years.
