Used EV finance market jumped 45% in 2022, Experian says

Consumers financed more than 91,000 used electric vehicles in 2022, up 45 percent from a year earlier, Experian said in a new analysis of the small but growing used-EV market.

"We're finally starting to pick up some volume in the used space," Experian senior director of financial solutions Melinda Zabritski told Automotive News.

Capital One Auto Finance was the most popular source of financing, capturing 6.7 percent of the used-EV market, 0.2 points ahead of No. 2 Wells Fargo Auto. Bank of America ranked third, handling 4.8 percent of used-EV financing.

The 2019 Tesla Model 3 was the most popular financed used EV at 11 percent of the loan and lease market. The 2020 Model 3 placed second with 8.1 percent, and the 2018 Model 3 took the third-place spot at 7.7 percent.

The 2021 Ford Mustang Mach-E had the largest share among automakers outside of Tesla. It ranked seventh at 2.6 percent.

Used-EV borrowers had the highest credit scores among all used-vehicle powertrain categories, averaging a 729 compared with a 673 average among consumers financing used gasoline models. Eighty-one percent of used-EV borrowers had prime or super-prime credit scores, compared with 56 percent of customers for used gasoline-powered models.

Sixty-two percent of used EVs changing hands in 2022 were financed using a loan, up from 57 percent a year earlier, according to Experian. Used-EV leases shrank to 3.3 percent of the market from 3.7 percent. Banks and credit unions dominated the used EV finance market with 42 percent and 34 percent shares, respectively.

Eighty percent of used-EV loans involved models from the 2018 model year or newer, Experian said.

The average used-EV loan meant a $792 monthly payment, up from $614 a year earlier and continuing a five-year upward trajectory. The average used-EV value also rose between 2018 and 2022, climbing to $53,367 from $28,024.

However, buyers have taken on progressively less debt on their EVs. Consumers went underwater to buy used EVs in 2018, borrowing an average of 104 percent of what the vehicles were worth. By 2022, they only financed 92 percent of their used EVs' value.

Zabritski said used-vehicle prices soared with the introduction of the Tesla Model Y and the Ford Mustang Mach-E into the mix.

"That really drove up the value," she said.

Meanwhile, used-vehicle demand and pricing had also risen, allowing customers with trade-ins to put more equity into deals and borrow less.

"We see the same effect just outside of EV as well," she said. But the increase in used-vehicle values meant someone trading one used EV to buy another used EV would be "in a much more equitable position."