Vehicle Equity Trends: 2023 vs. 2024

Notably, while the average vehicle equity has seen a decline, there has been a significant increase in the percentage of customers who have fully paid off their vehicles.

In 2024, the average vehicle equity was recorded at $8,724, which represents a decrease from the previous year’s figure of $9,387 in 2023. This decline in average equity is from continuing shifts in market conditions by model because of an increase in vehicle depreciation due to new vehicle availability.

Conversely, the percentage of customers who have paid off their car loans has shown a positive trend. In 2024, 48.8% of customers reported having fully paid off their vehicles, an increase from 44.5% in 2023. This rise suggests that more consumers are achieving ownership of their vehicles, potentially reflecting improved financial stability or a shift in consumer priorities towards debt reduction. It can also mean vehicle affordability has gotten tougher and they are keeping their cars longer.

In 2023, the average age of vehicles on the road started at 12.2 years and as 2024 was finishing the age has increased to 12.6 years.

There are more vehicles on the road that are paid for. Those vehicles are worth less than they were at the height of the used car valuation times in 2022 and 2023. They will continue to decline in value as the new car market stabilizes, but it could be 2028 before we see a full normalization within the used car market. The lack of new cars from 2020 to 2023 is causing a lack of supply of used cars.

Car dealers should push hard to help customers understand their current vehicle will never be worth more than it is now, and that is emphasized even more because we are still experiencing an inflated used car market. This may be the one time in someone’s life to see so much vehicle value return on a vehicle purchased before 2021.

P.S. We see a significant number of people with paid-off cars re-entered the market 27 months after paying their car off.