SCHAUMBURG, Ill.—Credit unions this December can expect more members walking in for luxury vehicle loans than at any other time during the year.
They can also expect these borrowers to be good credit risks, with the majority looking to lease, a new survey reveals.
A new report from Experian Automotive finds that more than 10% of all luxury vehicle registrations between 2010 and 2014 occurred in December. The next highest month was November, at 8.8%.
“Every year as the holiday season nears, consumers can expect to see a number of commercials and marketing campaigns advertising incentives on luxury vehicle models,” said Brad Smith, Experian’s director of automotive market statistics. “While some consumers may be intrigued by the seasonal deals, others may be driven by the enjoyment of attaching the big red bow to the car as a gift. Either way, December is considered — by far — to be luxury vehicle month.”
Experian also examined the demographic and credit characteristics of consumers who purchase a luxury vehicle and found that they are more affluent and a lower credit risk than the general population. Findings show that individuals who earn more than $100,000 per year are 66% more likely to purchase a luxury vehicle, while consumers over the age of 40 are 8% more likely and men are 4% more likely. Furthermore, the average credit score for a luxury vehicle buyer is 746, which is 36 points higher than the credit score for an average new car buyer.
Additionally, the analysis found that 54% of consumers who purchase a luxury vehicle do so with a lease, while 30% take out a loan and 16% pay in cash.
“Given the increased price for luxury vehicles compared with other vehicle segments, it’s understandable that the average buyer has a more affluent background,” said Melinda Zabritski, Experian’s senior director of automotive finance. “That being said, it’s clear that these consumers still are exploring ways to keep their monthly payments low. By choosing to lease vehicles, consumers are able to lower their payments by more than $160 a month.”
Findings from the analysis also show that the top five luxury brands are Lexus (18.2%), Mercedes-Benz (17%), BMW (16.4%), Acura (9.5%) and Audi (9.5%). At the model level, the top five are the Lexus RX 350 (5.1%), Mercedes-Benz C Class (4.1%), BMW 3 Series (4%), Acura MDX (3.2%) and Lexus ES 350 (2.9%).
Other findings:
• The average loan amount for a luxury vehicle is $42,876, nearly $14,000 higher than the average new vehicle loan amount.
• During the third quarter of 2015, the average monthly payment for a luxury vehicle was $755, approximately $273 higher than the overall average monthly payment for a new vehicle.
• Tesla has the highest average monthly payment for luxury vehicles at $1,285, while Acura has the lowest, at $605.
• The average monthly lease payment for a luxury vehicle is $592, approximately $194 higher than the average new vehicle monthly lease payment.
• The average interest rate for a luxury vehicle is 3.1%, compared with 4.6% across all vehicle segments.
• Sport utility vehicles are the top luxury vehicle body style (46.4%), followed by sedans (41.8%) and coupés (6.5%).