Business
Open Lending Research Uncovers Near- and Non-Prime Consumers’ Automotive Financing Hopes and Doubts
Sixty-nine percent of near- and non-prime consumers plan to pay off their loans early, with one-quarter of 2023 used car buyers spending more than $600 on
About this update from Open Lending Corporation
[{"type":"text","content":"\nSixty-nine percent of near- and non-prime consumers plan to pay off their loans early, with one-quarter of 2023 used car buyers spending more than $600 on their monthly car payment\n\n\n AUSTIN, Texas--(BUSINESS WIRE)--\nOpen Lending Corporation (NASDAQ: LPRO) (“Open Lending” or the “Company”), an industry trailblazer in automotive lending enablement and risk analytics solutions for financial institutions, has completed a study on vehicle accessibility and automotive financing perceptions among near- and non-prime consumers. As high interest rates and vehicle prices create affordability barriers, the findings show how lower-credit consumers approach car ownership and manage debt, highlighting opportunities for lenders to engage creditworthy near- and non-prime consumers. The full report will be released in February.\n\n\nThis year’s 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. For 2024, the report digs deeper into the near- and non-prime segment, which comprises consumers significantly impacted by vehicle accessibility.\n\n\nOpen Lending surveyed 1,042 U.S.-based consumers who fall within either the near-prime (i.e., credit score of 620-659) or non-prime (i.e., credit score of 580-619) credit tier. Initial findings from the survey include the following:\n\n\n\nNear- and non-prime consumers are proactive about managing debt. Sixty-nine percent plan to pay off their loan early.\n\n\n\nInterest rate hikes and high vehicle prices are pushing near- and non-prime consumers out of the market. Twenty-five percent of near- and non-prime consumers are paying over $600 per month for a used car they purchased in 2023, up from the 8% who purchased one between 2020 and 2022.\n\n\n\nGeneration Z near- and non-prime consumers are more selective about automotive loans and reluctant to take on debt. Sixty-one percent of those aged 18-42 have a term limit of 48 months or less, compared to just 42% of those aged 43-68.\n\n\n\n“Near- and non-prime consumers have hesitations and doubts around the automotive lending process, and that’s not something lenders should simply accept,” said Matt Roe, Chief Revenue Officer at Open Lending. “Financial institutions and lenders can garner trust by making the process ...