While it makes sense that the older a person is, the better credit he or she will have established, banks still need to take care when determining potential borrowers. Credit application software is a key tool for this process.
However, recent research shows that when it comes to car loans specifically, the Baby Boomer generation might be the most financially qualified.
According to a study from the University of Michigan's Transportation Research Institute, consumers who are between the ages of 55 and 64 are the most likely to buy a new car. The main reason for this is that they have the largest number of licensed drivers. Specifically, in 2011, purchase rates in that age group were one for every 14.6 drivers.
By comparison, for drivers in the 18- to 24-year-old category, the rates were one vehicle purchased for every 221.8 drivers.
The study's author, Michael Sivak, explained to the Credit Union Times that the takeaway point is that Baby Boomers are the best customers. He added that the findings suggest that marketing efforts focusing on the 55- to 64-year-old age group yield the greatest success.
John Worthington, executive vice president and communications officer at Security Service Federal Credit Union, told the news source that he's not surprised at the study's findings.
"As the Boomers have aged and generally acquired more wealth, it is not surprising that they are a dominant demographic in the car buying market, especially as the economy is showing some signs of recovery," Worthington said.
Even with older generations having a greater likelihood at having strong credit, financial organizations are still advised to invest in comprehensive loan management software. That way, creditworthy borrowers—regardless of their age—can be found and given a payment plan that fits their needs and will not hinder the organization.