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As More Off-Lease Vehicles Go to Market, Used Car Demand for Prime and Above Consumers Rises

While used vehicle financing has traditionally been associated with non-prime borrowers, a new TransUnion (NYSE:TRU) study has found that consumers across the credit spectrum are increasingly evaluating used vehicles as a more practical option. This trend is especially noteworthy among consumers with prime and higher credit scores, and is believed to be driven in part by the influx of off-lease vehicles to the marketplace.

The study found that, contrary to popular belief, prime and above consumers are making up the majority of used vehicle finance transactions. From 2016 to 2018, these lower-risk consumers generated 56% of used vehicle loans. Over the past five years, used vehicle sales have accelerated from 1.3% year-over-year growth in 2014 to 3.1% in 2018. Meanwhile, new vehicle sales have slowed across all risk tiers, falling to 0.6% year-over-year growth in 2018, down from 5.9% in 2014.[1]

New vs. Used: Auto Finance Originations by Risk Tier (2016-2018)

Vehicle Type Prime and Above Non-Prime
New 76% 24%
Used 56% 44%

VantageScore 3.0 risk ranges: Non-prime= 300-660; Prime and above= 661-850

“In 2016, the auto sales dynamic changed as consumer purchases of used vehicles outpaced new vehicle sales,” said Brian Landau, senior vice president and automotive business leader at TransUnion. “Used cars have become an increasingly attractive prospect for both lenders and consumers. Lenders have an opportunity to increase their activity in this segment of the market, as it is more than twice the size of the new vehicle market.”

For prime and above consumers, the vast majority of used car loans were used to finance late model, off-lease vehicles—i.e., less than four years old. The number of such vehicles grew to 3.4 million in 2018 from 2.0 million in 2014.[2] This trend has helped spur demand among consumers, as the average age of a used vehicle at purchase has declined from 4.6 years in 2014 to 4.1 years in 2017.[3]

Prime and Above Consumers Seek Out Late Model Vehicles

Used Vehicle Age Prime and Above Non-Prime
0-3 81% 63%
4-6 10% 17%
7-9 4% 10%
10+ 5% 10%

“Lenders focusing on low-risk consumers have good reason to offer financing in the used car arena,” added Landau. “The increased supply of late model vehicles available in the market makes it easier for lenders to expand their used vehicle finance offerings while still managing their collateral risk exposure.”

TransUnion’s analysis synthesized insights from TransUnion’s own consumer credit database with aggregated U.S. new and used light vehicle registration volumes from IHS Markit. For more information about TransUnion’s Used Vehicle study, please visit

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[1] Source: Edmunds Used Car Report 2018

[2] Source: Edmunds Used Car Report 2018

[3] Source: Edmunds Used Car Report 2018