Source: AutoRemarketing – January 29, 2024 – Open Lending Corp. offered a glimpse into some of the insights found through its newest study on vehicle accessibility and automotive financing perceptions among near- and non-prime consumers.
The report builds on Open Lending’s 2023 Vehicle Accessibility Index, which explored the barriers to vehicle ownership and how owning a vehicle impacts consumers’ opportunities and livelihoods.
According to a news release, initial findings of the Open Lending survey of 1,042 U.S.-based consumers who fall within either the near-prime (credit score of 620-659) or non-prime (credit score of 580-619) credit tier included:
—Near- and non-prime consumers are proactive about managing debt, as 69% plan to pay off their contract early.
—Interest rate hikes and high vehicle prices are pushing near- and non-prime consumers out of the market. The survey showed 25% of near- and non-prime consumers are paying more than $600 per month for a used vehicle they purchased in 2023, up from the 8% who purchased one between 2020 and 2022.
—Generation Z near- and non-prime consumers are more selective about automotive financing and reluctant to take on debt. The survey showed 61% of those aged 18-42 have a term limit of 48 months or less, compared to just 42% of those aged 43-68.
“Near- and non-prime consumers have hesitations and doubts around the automotive lending process, and that’s not something lenders should simply accept,” Open Lending chief revenue officer Matt Roe said in the news release. “Financial institutions and lenders can garner trust by making the process more transparent and accessible.
“By analyzing broader, alternative data to measure creditworthiness, lenders can offer loans to a more diverse pool of borrowers. And when lenders have more data and information about their customers, they can provide an experience that fosters continued loyalty,” Roe went on to say.
Open Lending said the full report will be released in February.