- The key measurement of automotive credit access improved last month, meaning the average American had an easier time finding a car loan
- Most terms moved in buyers’ favor, though lenders approved fewer applications
It became easier to obtain a car loan in October, and shoppers had an easier time finding a favorable loan for the second consecutive month.
The Dealertrack Credit Availability Index measures the difficulty of qualifying for all types of car loans. It increased by 0.4% in October – a minor adjustment, but one that moved in favor of car shoppers. Kelley Blue Book parent company Cox Automotive publishes the index.
Related: Is Now the Time to Buy, Sell, or Trade-In a Car?
Lenders approved 72.6% of applications last month – 1.4% fewer than in September.
However, lenders accepted smaller down payments. The average down payment last month was 13.3% of the loan value, down from 13.5% the month before.
Related: Fed Cuts Rates, but Auto Loan Rates Still Rising
They also offered longer loan terms, with 27.5% of new loans extending beyond 72 months. That can bring down monthly payments, but keeps buyers in debt longer.
Lenders extended more loans with negative equity, rolling part of an old loan into a new one because borrowers had traded in cars they hadn’t fully paid off.
Lenders extended more loans to subprime borrowers (those with credit scores under 620). That news is somewhat surprising, given that a pair of banks specializing in subprime loans declared bankruptcy recently, which has shaken investors’ confidence in the market.
