Car loans get easier to secure—even for riskier borrowers

Auto credit availability, a measure of how easy it is for consumers to get financing for car purchases, improved in February after months of slow and steady progress.

Driving the news: Cox Automotive reports that the Dealertrack All-Loans Index was 95.3, up 3% year-over-year—the highest level of auto loan availability since December 2022.

By the numbers: Over the past year—credit access loosened the most at credit unions, while auto-focused finance companies loosened the least. 

• The average approval rate is up 10 basis points, and subprime loans saw a meaningful boost in share, increasing 150 bps.

• Meanwhile—longer loan terms became more common (up 50 basis points), which helps keep monthly payments lower—but also means paying more interest over time.

• Down payments inched up 10 bps, and more borrowers are carrying negative equity (up 110 bps).

• The 5-year U.S. Treasury yield fell 14 bps, but auto loan rates fell even more—down 36 bps. 

Why it matters: Surprisingly, lenders are cutting rates despite a growing share of subprime borrowers, hinting at a bigger appetite for risk. (It’s worth noting that subprime delinquencies are near historic records.) 

But with auto loan rates still elevated overall (and an increase in payment extensions), lenders might have a buffer still in place to cover potential defaults—betting on volume over caution in a competitive market.

Big picture: Auto financing is more accessible than a year ago, but it’s not meaningfully cheaper. Lenders are lowering rates and approving more loans—even for riskier borrowers—but they’re still hedging their bets. Higher down payments, longer terms, and growing negative equity suggest they’re stretching the limits without breaking them. 

What we’re watching: Lenders are keeping the market moving, but rising late-stage delinquencies signal this may not end well in the long term.

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