Millennials are Making Purchases on Their Own Terms
It seems like the media is onto somewhat of a negative trend when it comes to labeling millennials. They call them lazy, self-obsessed, entitled and ungrateful. In every generation you are going to find people with these negative traits. And even the best of us can be any combination of those descriptors at any given time. However most studies have debunked the whole concept of younger folks being nothing but a bunch of negative, lazy individuals. Could some of these negative personality traits be showing up in higher volume among millennials? That’s a possibility, but a subject best left for another outlet. It is important for lenders, especially auto loan lenders, to take note of some important aspects of people in this country who were born between 1980 and the mid-2000’s.
To start with, millennials are a huge, always changing and progressive-thinking group of people. The millennials make up the largest, most educated and highly diverse generation in the United States as of right now. They account for a full third of the nation’s population and about 80 million of them are between the ages of 18 and 34. In one, short decade they will make up nearly 75 percent of the country’s workforce.
The second thing for lenders to take note of is that they will be purchasing cars and borrowing money to do this. It is just important to remember, though, that they will be looking to borrow according to their preferred terms and timeframes.
A recent study conducted by Deloitte found that nearly 61 percent of millennial consumers had plans to purchase or lease a new vehicle within the next 36 months. About 23 percent of them planned to purchase or lease a car within the next 12 months. In consideration of these new lending opportunities, let’s take a look at some interesting facts about the lending habits of millennials in the United States.
There is a much narrower generational gap between millennials and the previous generation – Gen X. In fact, studies indicate that the financial profiles of millennials is very close to what we see with members of Gen X.
Some say that millennials are not quite as stable as other generations. But when it comes to changing phone numbers, addresses, employers and even bank accounts, their numbers pretty much line up with Gen Xers. Of course, the work history of millennials is a bit shorter than other generations. This makes sense, as they are younger after all. That being said, they tend to earn a bit less per month – about $800 less – than their Gen X counterparts. With regards to loans, however, millennials are only borrowing about $120 less than the folks in the Gen X generation.
The most congruent pattern is revealed when it comes to purchasing cars. A study by J.D. Power that was conducted last year reveals that millennial purchases account for about 26 percent of new vehicle sales, while Gen X purchasers made up about 24 percent of purchasers. After all the numbers were crunched it looks like millennials are on a pace to increase their car buying by about 17 percent, once all of the numbers from 2014 are completely tallied.
It is time for lenders to see that selling cars to millennials is not all that much different than selling to other generations. If anything, this generation just seems willing to wait a bit longer to purchase their first new cars than previous generations were. Some tweaks may need to take place in the industry to match up with the purchasing patterns of millennials, but lenders can rest assured that this generation will be purchasing lots of new vehicles in the near future.