Credit score reporting firm Experian says drivers are choosing used vehicles over new ones greater than ever earlier than. Within the second quarter of 2022, 62 p.c of automotive consumers financed a used automotive, which is a gentle enhance from 60 p.c earlier this 12 months and a good greater enhance from the identical quarter final 12 months at 58 p.c, in response to Automotive Information.

Whereas U.S. automotive consumers have traditionally opted for used vehicles, mortgage traits present preowned gross sales are outpacing new gross sales by wider margins. In earlier years, complete U.S. automotive loans had been break up at round 59/41, with the larger quantity going to used vehicles. Based mostly off the most recent Experian report, the break up is now 62/38 as consumers attempt to keep away from right this moment’s greater costs for brand new vehicles.

That doesn’t imply used automotive consumers are resistant to greater auto costs, total. Since used vehicles have gotten dearer, used automotive loans reached document costs as much as $28,534, nearly $4,500 greater than final 12 months. Month-to-month funds for used automotive loans at the moment are as much as $515, whereas mortgage phrases elevated to document lengths of 68 months.

And the standard used automotive shopper is completely different now than prior to now. It’s not simply savvy consumers searching for used vehicles that’ve already taken the largest hit from depreciation. Neither is it solely consumers with decrease credit score scores. Experian says that 77 p.c of near-prime clients had been financing used vehicles. These are consumers with credit score scores starting from 601 to 660. However consumers throughout all credit score tiers are choosing used vehicles over new ones.

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On the very least, Experian’s knowledge exhibits that credit score unions are gaining popularity amongst debtors. Credit score unions now maintain nearly a 3rd of all used automotive loans, or about 29 p.c, which is a rise of 5 share factors over final 12 months. Credit score unions are likely to have decrease rates of interest than banks and different lenders, so which means used automotive consumers aren’t taking a shower on their $29,000, $500-a-month, used automotive loans.

Regardless that used vehicles are cheaper, shopping for any automotive nonetheless appears bleak. Experian’s auto mortgage figures present many consumers at the moment are having to decide on between used vehicles that price rather a lot or new vehicles that price much more. It’s no marvel increasingly individuals are flocking to used automotive heaps and skipping seller showrooms.