On Tuesday, FactorTrust released the most recent research findings in its series of underbanked indices, the Underbanked Index – Auto, which is designed to provide insights into the earning and living trends of credit-challenged consumers seeking a vehicle.
Such insights can help auto financing companies to better know their customers and make more informed decisions on extending credit.
The Underbanked Index – Auto identified at least five key insights of credit-challenged consumers buying and financing a vehicle, including:
1. Age and gender
Average age – applicant: 38
Average age – borrower: 39
Average loan amount trends up to age 46 ($2,260)
Males and females: 50 percent/50 percent (applicants) and 55 percent/45 percent (borrowers)
Applicant: $2,926/month ($35,112 annualized)
Borrowers: $3,000/month ($36,000 annualized)
National average comparison: Fifty percent of American workers make less than $30,000 per year, according to the Social Security Administration.
Nearly 60 percent are employed in two primary areas: retail (41 percent) and quick serve restaurants (16 percent).
The retail employment sector has historically been the largest employer in both the non-prime auto and consumer finance segments.
Forty-four percent who graduated high school went on to earn a bachelor’s degree or higher
Fifty-five percent hold only a high school diploma
One percent has attended a vocational or technical school or program
National average comparison: Forty percent of the U.S. population holds a high school diploma, according to 2016 U.S. Census Bureau information.
Length of residence: 2 years
National average comparison: The average American lives in one residence for 11 to 13 years, according to the National Association of Home Builders)
“This index, specific to the auto industry, analyzes the proprietary performance and behavioral data we have on non-prime consumers that auto financing companies can’t get from the Big 3 bureaus,” said FactorTrust chief executive officer Greg Rable. “By pairing this data with traditional data, these companies can see the complete credit profile and creditworthiness of consumers.”
Data is based on analysis from FactorTrust’s proprietary database of 250 million records related to underbanked consumers collected by the company each quarter. The findings of the index assist financial institutions, associations, analysts and media interested in tracking, benchmarking or understanding the needs of underbanked consumers.