What’s your guess on which generation has the highest loan balance?
Experian reported at the end of 2024 that monthly average car payments were $742 for new vehicles and $545 for used ones, but new data from auto refinancing company Caribou has shown that the amounts that different generations pay vary more than you might think.
Caribou’s study included Gen Z, born between 1997 and 2012, millennials, born from 1981 to 1996, Gen X, born between 1965 and 1980, and baby boomers, born from 1946 to 1964. In its report, Caribou cited Gen Z as spending the largest share of their income on car payments, but millennials were listed as having bigger average loan balances at $38,600. Gen Z was listed as spending the least monthly income on vehicle payments, and baby boomers had the highest average credit score at 735.
According to Caribou, Gen Z drivers are most likely to be behind the wheel of a Honda Civic, with an average loan amount of $32,069 and having a 14.05% APR. Millennials were cited as frequently driving a Chevrolet Silverado 1500 and taking on loans with a 12.44% APR. Their higher loan balances can be attributed to the colliding costs of education, housing, and family. Gen X is described as carrying the most significant original loan amounts due to a fondness for larger trucks like the Ford F-150, but these higher starting costs meant the demographic was more likely to achieve the highest monthly savings after refinancing at $147. Next to Gen Z, baby boomers took out the lowest loans at $35,844 on average, and they carried the lowest APR of 11.91%, aligning with millennials in their preference for the Chevrolet Silverado 1500.
The effect of refinancing on these generations’ auto loans
Caribou evaluated what these generations’ auto loans looked like after refinancing by accessing its customers with good credit scores and steady incomes who refinanced their auto loans in 2024. Gen X scored the highest average refinance monthly savings of $147, with millennials following at $143, and baby boomers and Gen Z logging $131 and $126 average monthly refinance savings, respectively. Gen X and baby boomers were tied for the lowest monthly refinance APR at 8.39%, while millennials landed at 8.42%, and Gen Z at 8.50%. Across the board, annual percentage rate (APR) reductions ranged from 3.51 to 5.56 percentage points. “Car payments are one of the biggest monthly expenses for millions of Americans, and for too long, people have assumed they’re stuck with the rate they got at the dealership. Our data shows that drivers of all ages can unlock real savings by refinancing. This isn’t just some money hack; it’s a necessity for many households,” said Simon Goodall, CEO of Caribou.
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Final thoughts
While refinancing might pose upfront costs that increase your overall loan cost, Caribou’s data shows that generations from baby boomers to Gen Z can benefit from the practice. Higher original loan balances mean larger payments earlier in a borrowing term, but they can also lead to greater savings through refinancing. Caribou’s report also illustrates that Gen Z drivers face unique affordability challenges with their pattern of spending larger shares of their monthly income on car payments despite lower loan amounts. Baby boomers exhibited strength in multiple categories on account of their stronger average credit scores.