Despite the rapid growth of ride-hailing startups, private car-based mobility remains the number one transport option for Australians, with 19.5 million vehicles available for a population of around 26 million. Privacy, comfort, freedom, and convenience compared with public transport could be some of the reasons behind the country’s high rate of car ownership.
Australians access billions of dollars in finance for their car purchases each year. It’s worth exploring how much Aussies are borrowing and what they’re buying with their car loans. Are individuals buying new or used cars with their car loans? How do purchasing choices funded by car loans break down across different demographic groups?
1. Car loan sizes: how much is borrowed
The average loan size across all age groups is $31,738.40. Overall, those aged between 35 and 45 as well as those aged around 55 are the most likely to have the biggest loan amounts.
In the aged-20 group, the average gross amount borrowed is $26,520.40. The amount borrowed tends in an upward trend until the aged-50 group, with 25-year-olds borrowing an average of $29,643.30, 30-year-olds borrowing an average of $31,999.90, and 35-year-olds borrowing an average of $33,141.20.
Next, 40-year-olds borrow an average of $33,034.60, and 45-year-olds borrow an average of $33,144.10. By the aged-50 group, the average amount drops slightly to $31,242.00. This rises again at the aged-55 group, who borrow an average of $33,318.10.
The trend moves downward for the aged-60 group, who borrow an average of $28,357.50, and drops again at the aged-65 group, who average $24,670.7. At aged-70, the average rises to $33,632.70. For the aged-75 group, this drops again to $15,777.00.
However, variations in sample sizes should be noted as this could affect how accurately averages are representing whole-population trends.
For example, the aged-75 group number is taken from a sample size of only one loan, and the aged-70 group has a sample size of only 7 loans. The figures for the aged-65 and aged-60 groups are based on just 15 loans and 60 loans respectively.
In contrast, the aged-30 and aged-35 groups have the greatest borrowing activity at 678 loans and 556 respectively. Aside, the data could suggest those aged between 25 and 50 were the most likely to be financing a car purchase compared with other age groups.
Marital status and dependants
The average amount borrowed for all marital-status and dependent-number categories is $31,738.40. For all marital-status categories collectively, the average loan size trends upwards with each additional dependent up to three children.
Singles borrow an average of $29,924.40. Married/couples borrow an average of $32,725.20 whilst those in defacto relationships borrow an average of $32,027.40.
For those with no dependents, the average loan size is $30,738.80. Average borrowing amounts then increase to $31,722.60, $34,130.00, and $34,326.10 for one dependent, two dependents, and three dependents respectively.
For those with four dependents, the average loan size is $31,477.60. This drops to $27,187.80 for five dependents, increases to $50,474.00 for six dependents, and $28,585.00 for seven dependents.
2. Sale types
What type of sales are car loans used to finance and how long does settlement from loan pre-approval take?
The majority (around 80%) of transactions financed with a car loan settle within 10 days and 90% settle within 30 days from pre-approval.
A small percentage settle within one or two days, and these transactions likely involve borrowers who’d already found their ideal car before applying.
The largest share of car-loan-funded transactions are dealership sales. Private sales account for the next largest share, and refinancing the smallest share.
3. Popular car models and preferred brands
The data reveals Ford and Toyota to be the top brands among those borrowing to buy their car. More specifically, the Ford Ranger and Toyota Hilux are the two most popular cars for people borrowing to buy their car.
For those aged 18 to 19, the Holden Commodore is the model of choice, whilst those between the ages of 20 and 24 as well as the 25- to 29-year-olds tend to opt for Toyota Hilux.
For all age buckets from 30 to 59, the number one car model is the Ford Ranger. Those aged from 60 to 64 have a preference for the Mitsubishi Triton.
From 65 to 69 and 70 to 74, Australians borrowing to buy cars, like their 20- to 29-year-old counterparts, prefer to buy the Toyota Hilux. From ages 75 to 79, the most popular car for car-loan-funded buys is the Toyota Ranger.
Millennials vs boomers
In terms of millennials vs boomers, these two generations of typically contrasting tastes share a rare agreement when it comes to preferred car brand. Among those financing their car purchase, Australians aged between 24 and 39 and those aged between 56 and 74 both are most likely to choose a Toyota-branded vehicle.
Among borrowers, the Ford Ranger is most likely to be the car of choice for those in defacto and married relationships as well as those who are single. Those in a civil union borrowing to buy their car are likely to choose a Toyota Landcruiser, while those in the Other category prefer the Toyota Hilux.
Income brackets appear to have little impact on the popularity of models among those borrowing to buy their car. From tax brackets 1 to 5, the most popular car was the Ford Ranger with the exception of tax bracket 2, for which the Toyota Hilux is the preferred model.
4. New or used cars
For those financing their car purchase, a used car is the most likely option, with 69.5% of borrowers choosing used. The remaining 30% or so opted for a new vehicle.
5. Popular times of the year for car loans
April and March are the least popular times of the year for car loans, with just 88 and 111 loans recorded for these months respectively. May tends to see more borrowing activity, with 148 loans logged, and loan levels steadily increase through June (185), July (194), August (262), and September (289), to exceed the 222 loans transacted in February.
By October (405) and November (469), the busiest times of the year for car loans, car loan numbers have exceeded the levels of the relatively popular periods in January (301) and December (384).
6. Which states or territories are borrowing most?
It’s not surprising the country’s most populous states, New South Wales (957 loans), Queensland (838 loans), and Victoria (764) record the most car loans. However, Victoria’s population exceeds Queensland’s by around 1.5 million but the southern state records fewer car loans than the sunny northern state.
Western Australian ranks fourth with 262 car loans processed, and next is South Australia with 137 car loans. As expected, their rankings are in line with their populations.
The Australian Capital Territory comes next in sixth place, although it is the seventh most populous state/territory in Australia, after Tasmania. Tasmania ranks seventh for car loan numbers with 27 loans recorded, followed by the least populous state/territory, the Northern Territory, which recorded 13 loans.
As one of Australia’s fastest growing providers of secured car loans Plenti has a wealth of data and insights on the automotive industry and consumer trends. If you are interested in connecting with use you can reach out to us via firstname.lastname@example.org.