Auto loan credit access reached its peak for 2025 in December, hitting a two-year high, driven largely by more favorable pricing and loan approvals.
The details: Cox Automotive’s Dealertrack Credit Availability Index climbed to 99.6 last month, up 3.6% year-over-year and the index’s best level since October 2022.
The approval rate for auto loans increased for the second month straight, rising to 73.7% in December, up 90 bps from November, and up 80 bps from December 2024 (72.9%).
Gains were seen across nearly all channels in December, the largest being in the independent used segment. However, auto credit access for certified pre-owned cars (CPO), which dropped 0.4%.
Among lender types, captives led the improvement gains, with credibility rising 1% at banks, 0.8% at finance companies, and 0.7% at credit unions up 0.7%.
Why it matters: For dealers, looser credit means more financeable shoppers and better lead-to-sale conversion, especially in the used market. But the improvement is being driven by pricing and a growing share of subprime approvals (up 2.3% YoY to 14.3%).
What they’re saying: “The full-year improvement was driven primarily by increased subprime lending, which accounted for over half of the index gain as lenders expanded their risk appetite after a cautious 2024,” according to Jonathan Gregory, senior manager of economic and industry insights at Cox.
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Between the lines: Many lenders are trying to balance loan origination growth with consumer affordability pressures.
The share of loans with terms greater than 72 months rose by 20 bps (from 27.1% to 27.3%) and is up 380 bps year over year, reversing November’s decline.
The good news: A narrower yield spread (the gap between what lenders pay to borrow funds and what they charge borrowers), shrank by 18 basis points in December. Meaning, lenders retained less margin per loan but made credit cheaper and more available to consumers.
Bottom line: With longer terms and elevated subprime share back in the mix, lenders face a balance between maintaining volume and keeping delinquencies contained. December’s reading closes out 2025 on a high note for access, but it also marks the point where conditions may have loosened as far as the current cycle can comfortably allow.
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