A New Car for Graduation? Millennials and Auto Purchasing

May 20, 2015
By Patrick Reemts

Purchasing a new car was once considered a rite of passage for young adults and college graduates, but does this apply to the millennial generation in the current economic climate?1

A recent Time.com study showed that 71% of millennials prefer to buy a car rather than lease one2.   MTV’s “Millennials have more drive” research study found that one in three young people plan to lease or buy a car within the next 6 months3 and many car makers are offering special discounts and incentives to college graduates.4   According to Bloomberg, the auto industry is poised for a sixth year of annual sales growth driven by job gains, consumer confidence, and gas prices.5  This is great news for the industry.   However, ID Analytics research findings show that while 39% of auto finance applications were from millennials, they have the lowest booking rates across all generations studied.

application_bookings chart

We also discovered that the majority of the thin file population from the auto finance industry is millennials, which is confirmed by a recent CFPB white paper on “credit invisibles”.6

Auto industry thin file chart

In other industries, we’ve observed millennials outperforming their counterparts from other generations who represent the same risk according to traditional credit data. How can an auto lender understand the true risk of a thin file? By factoring in additional insight and information from alternative data for a more comprehensive assessment. As we wrote about back in January in our Fueling’ Auto Lending in 2015 post, by using alternative data, lenders can get a better understanding of the consumer’s risk profile to grow their portfolios profitably. To learn more about millennial credit activity, read our new white paper Millennials: High Risk or Untapped Opportunity.



Patrick Reemts is Vice President of Credit Risk Solutions at ID Analytics, LLC.


1. http://www.dmv.org/buy-sell/new-cars/buying-new-car.php

2. http://time.com/money/3673825/millennials-study-cars-houses/

3. http://thepub.viacom.com/sites/mtvpress/Pages/MTV’s-Millennials-Have-Drive-Research-Study-Executive-Summary.aspx

4. http://www.carsdirect.com/car-pricing/best-deals-on-a-new-car-for-college-graduates

5. http://www.bloomberg.com/news/articles/2014-11-18/u-s-auto-sales-poised-for-sixth-straight-year-of-growth

6. http://files.consumerfinance.gov/f/201505_cfpb_data-point-credit-invisibles.pdf