When financing older vehicles it's not the years but the mileage, according to one actuary.
Open Lending, which develops default insurance for auto lenders, announced in February that its coverage would support loans for 11-year-old vehicles — two years older than the previous cap.
Open Lending's research found a 9-year-old vehicle and an 11-year-old model with similar mileage pose a similar risk, Chief Revenue Officer Matt Roe told Automotive News. And so while his company has expanded the eligible pool of vehicles based on age, it has retained a 150,000-mile cap on mileage.
Open Lending calculates age using the vehicle model year and the current calendar year; for example, a lender using its program in 2023 could finance vehicles through the 2012 model year.
Roe said affordability and supply chain issues were driving consumers to older vehicles. S&P Global data cited by Open Lending indicates customers with sub-640 credit scores in 2022 financed vehicles averaging 6.4 years old — a year older than what they were buying in 2020.