Easy Riders: Boomers Have Highest New Car Loan Potential
When it comes to buying a new car, baby boomers may have an edge over the potential buying power of the much sought-after Generation Y.
Consumers in the 55- to 64-year-old age range are most likely to buy a new car simply because this group has the second largest number of licensed drivers, according to a new study, Marketing Implications of the Changing Age Composition of Vehicle Buyers in the U.S., from the University of Michigan’s Transportation Research Institute. Coming in first was the 45- to 54-year old age bracket that also includes boomers, the data showed.
Because baby boomers tend to have higher than average income, they are also more likely to pay cash to buy their new vehicle than a typical consumer, said Blair Korschun, president of CU Direct Connect, a Centennial, Colo.-based vehicle lending CUSO that serves 34 credit unions. They are also likely to put more money down, which lowers the loan to value and therefore, lowers the risk of a loan, he noted.
“(We) can see where baby boomers would be among the largest buyers of new cars for several reasons,” Korschun said. “Baby boomers are generally still in their peak earning years and their net worth is typically higher than a younger person’s. Also, new cars cost much more on average than used cars. Boomers are likely to have better than average credit scores because of their higher than average income levels.”