The used car market is going a bit whacky these days, with a spike in demand and dwindling supply leading to a massive increase in used vehicle prices. Unsurprisingly, used vehicle buyers are now seeking more financing and purchasing older models compared to last year.
Per a recent report from online lending marketplace LendingTree, the average financing sought for a two-year-old vehicle increased $5,176, or 28.3 percent, compared to Q2 of the 2020 calendar year. Additionally, the average age of used vehicles purchased increased 21.1 percent to 7 years for 2021, as compared to 5.8 years in 2020.
The LendingTree findings are based on an analysis of more than 600,000 anonymized online loan inquiries for auto loans filed through the LendingTree platform. The auto loans are for used vehicles aged at least one year old during April to June of 2020, and April to June of 2021. Researchers also calculated average loan amounts requested for all two-year-old vehicles and five of the most popular models on LendingTree.
The analysis was also extended to include specific cities within the U.S. Topping the list of cities with the greatest increase in amount per financing request was Madison, Wisconsin, with the average financing request in Q2 of 2021 set at $24,219, a 45.5-percent increase compared to Q2 of 2020, previously set at $16,644. That’s an increase of $7,575.
New Orleans, Louisiana saw the biggest jump in average used vehicle purchase age, with the average for 2021 set at 16.2 years, as compared to 6.4 years in Q2 of 2020, an increase of 9.8 years, or 153.1 percent. Meanwhile, the Chevy Tahoe had the biggest jump in average used vehicle age, up to 10.2 years in 2021 from 6.1 years in Q2 of 2020, an increase of 4.1 years, or 67.6 percent.
The latest fluctuations in the used vehicle market are the result of higher demand spurred on by the COVID-19 pandemic, as well as dwindling supply resulting from the global microchip shortage. As GM Authority covered previously, the average used vehicle price reached $25,000 for the first time last month.