More luxury cars are purchased in December than in any other month, largely because of holiday deals. And although luxury buyers tend to have high credit scores, the majority lease as a way of keeping payments down, Experian Automotive says.
“December is considered -- by far -- to be luxury-vehicle month,” Brad Smith, Experian’s director of automotive market statistics, said in a statement. That’s because holiday incentives on luxury vehicles are competitive, and some consumers buy on the thrill of attaching a big, red holiday bow to a new vehicle, he said.
In 2010-14, more than 10 percent of luxury-vehicle registrations each year came in December, Experian said. November followed with 8.8 percent of annual vehicle registrations.
Consumers who purchase luxury vehicles tend to have high credit scores and are “more affluent than the general population,” Experian said. Consumers who make more than $100,000 a year are 66 percent more likely to purchase a luxury vehicle than the general populace. The average credit score for a luxury-vehicle buyer is 746 --- 36 points higher than the average for a new-car buyer. Credit scores of 661 to 850 are considered prime and superprime on the VantageScore 3.0 scale.
Most luxury consumers lease, Experian said. Of all luxury vehicle transactions during the third quarter, 54 percent were lease deals, compared with 30 percent finance and 16 percent cash.
Because luxury vehicles are priced higher than mainstream vehicles, “it’s understandable that the average buyer has a more affluent background,” Melinda Zabritski, Experian’s senior director of automotive financial solutions, said in a statement.
The average loan amount for a luxury vehicle was $42,876 in the third quarter, almost $14,000 more than the average amount for a new vehicle, Experian said.
But “these consumers still are exploring ways to keep their monthly payments low,” Zabritski said.
One potential reason luxury buyers are eyeing low monthly payments is that they are purchasing an additional vehicle, Zabritski said.
“Some of these luxury brands that have heavy lease penetrations are likely second cars in the household,” so they can meet lease mileage caps, Zabritski said.
And some consumers “work their way through the luxury brands,” leasing one model and then another, she said.
The top five luxury brands financed, leased or paid in cash, based on registrations in December, were Lexus, Mercedes-Benz, BMW, Acura and Audi. The top five models were the Lexus RX 350, Mercedes-Benz C class, BMW 3 series, Acura MDX and Lexus ES 350, Experian said.
The average monthly payment was highest on Tesla models, at $1,285, and lowest on Acura models, at $605.
On average, luxury shoppers are leasing their vehicles for 36 months, which is just one month longer than the average for all consumers, Zabritski said.
The average monthly payment on luxury leases was $592 during the third quarter, Experian said. That’s about $194 more than the average new-vehicle monthly lease payment.
Luxury consumers are financing their vehicles for around 60 months overall, compared with 67 months for the average buyer, Zabritski said. Average loan terms for the top five luxury vehicles ranged from 54 to 64 months, she said.
“Higher scoring consumers on average tend to have slightly shorter loan terms, but also part of this is the captive angle,” Zabritski said. Some captives do not extend their loan terms to 72 months, she said.
For loans, Experian said, the average monthly payment on a luxury vehicle was $755, about $273 more than the average monthly payment for a new vehicle.