Auto credit access held steady in January month over month as borrowing costs ticked up, with credit access improving across most sales channels, according to Cox Automotive.
The details: Cox Auto’s Dealertrack Credit Availability Index last month was 100.0, on par with December’s level (the best reading since October 2022) an an improvement of nearly 5% against January 2025.
Approval rate for auto loans fell to 71.8% in January, down 110 basis points (bps) from December, but up 40 bps from January 2025 (71.4%).
Share of loans to subprime borrowers rose 70 bps month over month (from 15.0% to 15.7%) and is up 290 bps year over year.
The yield spread rose 31 bps (from 6.83 to 7.14), while the average contract rate rose 39 bps (from 10.5% to 10.9%), with the 5-year Treasury yield increasing 8 bps (from 3.70% to 3.78%).
Why it matters: Steady access with higher rates is a mixed bag: lenders are still writing deals, but the monthly payment squeeze is intensifying. Expect more customers to need term stretching, stronger structure (cash down), or alternative vehicle choices to stay within payment, making F&I execution, lender mix, and payment-to-income guardrails even more critical.
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Digging deeper: The share of loans with terms greater than 72 months increased in January, alongside negative equity share and down payment percentage, underscoring rising costs for borrowers.
Share of loans with terms greater than 72 months increased 50 bps (from 27.5% to 28.0%) and is up 400 bps year over year, continuing December’s increase.
Negative equity increased 220 bps month over month (from 54.1% to 56.3%) and is up 470 bps year over year.
The average down payment percentage increased 10 bps (from 13.3% to 13.4%) but is down 80 bps year over year.
Also worth noting: Credit access improved across practically all sales channels, with the largest gains in the non-captive new segment and in all-new and certified pre-owned (CPO) segments. Captives led the improvements in lender performance again, with credit availability rising 1.2%, with banks and credit unions also loosening, up 0.4% and 0.1% respectively.
What they’re saying: “Overall, the January Dealertrack Credit Availability Index reflected mixed auto credit conditions,” writes Cox Automotive’s Jonathan Gregory, senior manager, economic and industry insights, per a press statement. “While the index held steady at 100.0, individual metrics told a more complex story. Some measures continued to loosen, with increased subprime lending and longer loan terms offering expanded opportunities for certain borrowers.”
Bottom line: Dealers are getting a bit more lender oxygen, but the deal is getting harder to structure cleanly as rates rise and negative equity climbs. Winning stores will lean into payment-driven merchandising (including CPO), tighten trade and down-payment expectations early in the process, and stay proactive about lender routing as longer terms and subprime share grow.
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