Where Millennials Owe the Most on Their Cars

Millennials (ages 26 to 41) have lived through no shortage of financial crises. Now, as the U.S. grapples with soaring inflation, this unlucky generation can add car debt to their list of financial troubles. In fact, auto loans make up the second-largest share of non-mortgage debt among millennials, according to a 2021 LendingTree survey on debt by generation.

This study looked at where millennials owe the most — and the least — on their car loans. In addition to reviewing the median and average auto loan amounts among millennials in each of the largest 100 metros, we’ll share some tips on combating car loan debt.

Key findings

• Across the 100 largest U.S. metros, millennials owe a median of $15,281 in auto debt. Regardless of age or location, auto loan balances in the U.S. increased by $33 billion in the second quarter of 2022 to $1.5 trillion.
• In McAllen, Texas, millennials owe the most on their cars. The median auto debt balance among millennials in the south Texas metro is $21,446 — the only metro to cross the $20,000 threshold. McAllen millennials also topped the list the last time LendingTree conducted this study in June 2018, at $23,704. Joining McAllen in the top three this year are El Paso, Texas ($19,158), and Knoxville, Tenn. ($17,991).
• Millennials owe the least on their cars in Syracuse, N.Y. Millennials in the central New York metro have a median auto debt balance of $11,923. This is a substantial drop from June 2018, when millennials’ median auto loan debt was $15,086 (67th of 100 metros). Springfield, Mass. ($12,019), and Grand Rapids, Mich. ($12,335), join Syracuse in the bottom three.
• Memphis, Tenn., has the highest percentage of millennials with auto debt. Memphis (52.9%) is just one of seven metros in which at least 50% of its millennials have auto debt. Provo, Utah, has the lowest percentage of millennials with auto debt (31.5%).

Millennials in the largest U.S. metros owe thousands in auto debt

Millennials owe a median of $15,281 in auto debt across the 100 largest metros in the U.S. LendingTree auto loan expert Jenn Jones says millennial car debt may be so high because they’re also saddled with other forms of debt.

“In 2022, millennials were the largest group of homebuyers, accounting for 43% of U.S. home sales,” says Jones, citing data from the National Association of Realtors. “With housing prices being sky high, interest rates rising and car prices pretty much maintaining astronomical orbit, I’m not surprised that millennials have such auto debt. Under these pressures, millennials are likely taking longer to pay off their auto loans and putting less down at the start.”

They’ve also been experiencing inflation along with the rest of the nation. In fact, regardless of age or location, auto loan balances in the U.S. increased by $33 billion in the second quarter of 2022 to $1.5 trillion — accounting for an 11.9% jump from the second quarter of 2020. As inflation soars, Jones says drivers everywhere are probably feeling the effects.

Texas and Tennessee metros top the list for millennial auto loan debt

Everything really is bigger in Texas — including auto loans. Three Texas metros ranked highest for millennial auto loan debt, starting with McAllen. With median auto loan debts in McAllen totaling $21,446, it’s the only metro to cross the $20,000 threshold.

This isn’t the first time we’ve seen McAllen on the list, either. McAllen millennials also ranked highest for auto loan debt when LendingTree last conducted this study in June 2018. One positive note: McAllen’s median auto debt was $23,704 in 2018, meaning auto debt has shrunk over the past four years.

However, millennials in McAllen have a median auto debt 11.9% higher than the No. 2 metro on this list — El Paso, Texas. Millennials in El Paso owe a median of $19,158 in car debt. Knoxville, Tenn., follows behind at $17,991.

Jones believes low income may play a role. Notably, the poverty in McAllen was 22.0% in 2020 — considerably higher than the national poverty rate of 11.4%. While the poverty rate is higher than the U.S. average in each of the five top-ranking metros, Knoxville is the only one among those five with a similarly high poverty rate to McAllen, at 22.5%. Additionally, four of the five top-ranking metros also had median household incomes below the U.S. median of $64,994.

Riverside, Calif., is the only exception, with a median household income of $72,738. However, data compiled by LivingCost.org found that the average monthly cost of living in Riverside (including rent, utilities, transportation, food and other expenses) is $2,466 — 1.9 times higher than the cost of living in McAllen. Meanwhile, none of the other top-ranking metros cross the $2,000 mark.

By average amounts, McAllen ranks highest again, with millennials owing $29,671 in auto loans. El Paso again ranks second-highest, at an average of $24,983. That means the average loan balance in McAllen is $4,688 more than in El Paso. Following that, Povo, Utah, ranks highest — millennials here owe an average auto balance of $24,710.

Millennials owe the least in New York, Massachusetts and Michigan metros

On the other end of the list, metros in Northeastern states rank lowest. Millennials owe the least on their cars in Syracuse, N.Y, with a median auto debt balance of $11,923. Not only is that substantially less than the median auto loan in McAllen ($9,523 less, to be exact), it’s also a significant drop from when this study was last conducted. Syracuse millennials’ median auto debt was $15,086 in 2018 — ranking 67th among the top 100 metros examined.

Springfield, Mass., ranks second lowest, with millennials owing a median of $12,019. Grand Rapids, Mich., in the Midwest, follows at $12,335.

Notably, four of the five metros that rank highest are among the states with the highest public transportation use, according to a study from AllTransit. In fact, New York has the second-highest percentage of residents who use transportation, at 29%. Massachusetts and Connecticut also rank in the top 10, at 10% and 5%, respectively. Michigan is the only exception here.

Four of the five lowest-ranking metros for median auto loan balances are also among the metros with the lowest average auto loan balance. Toledo, Ohio, joins the bottom five here. The average millennial auto loan balance in Toledo is $16,084, followed by New Haven, Conn. ($16,186) and Hartford, Conn. ($16,194). Meanwhile, Syracuse falls to sixth, with average auto loan balances of $16,637.

Which metros have the highest percentage of millennials with auto loan debt?

When it comes to where millennials are the most likely to have auto loan debt, Southern metros rank highest. At the top of the list is Memphis, Tenn., where 52.9% of millennials have debt. That’s followed by Jackson, Miss. (52.6%), and New Orleans (52.3%).

More than 50% of millennials owe car debt in all five top-ranking metros. Beyond this group, just two other metros have at least 50% of millennials owing auto debt.

On the other end of the list, Provo, Utah, has the lowest percentage of millennials with auto debt, at 31.5%. That’s followed by San Jose, Calif. (34.4%), and Portland, Ore. (35.7%).

Public transportation may play a role here, too, as those with better access to public transportation may feel less inclined to take on auto debt. In fact, when ranked by accessibility, connectivity and frequency of service, four of the five metros with the lowest percentage of millennials with auto loan debt have among the highest public transportation scores. According to the AllTransit study, San Jose, Portland and Denver rank in the top 10 metros. Provo is the only metro that doesn’t rank among the top 25 for public transportation.

Full rankings

Combat car loan debt with these expert tips

Regardless of age, dealing with car debt can be a headache — particularly with high inflation. To combat car loan debt and pay off your loan faster, Jones offers the following tips:

• Make a payment twice a month. “By splitting your monthly car payment in two, you’re essentially paying down the loan faster without opening your wallet wider, which could save you several hundred dollars over the life of the loan,” she says.
• Put any extra cash toward the principal. “If you get a big tip or a work bonus and you’ve already got a rainy-day fund, put it toward the principal of your loan,” she says. “The more you pay off what you owe, the less you’ll pay in interest.”
• Don’t change cars unless necessary. “In most states, every time you get a vehicle, you’ll pay a couple thousand in taxes, registration and dealer fees,” she says. “Sure, it might be nice to get a car with better gas mileage, but all those fees combined with a hot market can mean a payment that costs you more than your potential fuel savings.”

Methodology

LendingTree researchers used an anonymized sample of credit reports from the first and second quarters of 2022 from more than 200,000 millennial LendingTree users to calculate their total auto debt obligations. Millennials were defined as those born between 1981 and 1996.

The results were then aggregated to the 100 largest metropolitan statistical areas to determine the percentage of millennials with auto debt, as well as the median and average balances among those millennials with auto debt.