Pundits often say Gen Y has an aversion to significant debt, but that appears to be changing on the auto front. They are not only buying cars, but borrowing to do so. Their wallets are adjusting to their evolving lifestyles.
New research from TransUnion finds that nearly 27% of total auto loan originations came from millennial borrowers in 2014, versus 16% in 2009 and 24.4% in 2013.
This was the highest rise in borrowing, as a generation, among the groups that TransUnion examined. Millennial borrowers’ total outstanding loan balances increased 23%, as a group, year over year. This was the highest rate of increase among generational groupings.
Average opening balances for millennials hit $18,678 in 2014, versus $17,942 in 2013.
Comparing the generations, while millennials’ share of new auto loans for 2014 came to nearly 27%, Generation Xers came to 34%, still representing a major portion of the borrowing pool. Baby Boomers were also a larger portion, at 32.3%. The so-called Silent generation represents only 7% of the borrowers.
TransUnion also reported that auto loan delinquency rates remained relatively flat. The 60-day auto loan delinquency rate budged two basis points to 1.16%, versus 1.14% in the fourth quarter of 2013. Overall auto debt per borrower came to $17,453 in the fourth quarter of 2014, reflecting the fifteenth straight quarterly increase.
“The growing average loan balances for millennials, combined with stable delinquency rates, indicate that we are still in the midst of a strong auto lending environment,” says Jason Laky, senior vice-president and automotive business leader for TransUnion.