- It hasn’t been this easy to qualify for a car loan since 2015.
- However, subprime borrowers (those with credit scores under 620) saw fewer new loans last month.
The last time it was this easy to qualify for a car loan? November of 2015.
The Dealertrack Credit Availability Index tracks how difficult it is to qualify for auto credit. It hit an 11-year high in July, meaning that borrowers had a historically easy time qualifying. Kelley Blue Book parent company Cox Automotive publishes the index.
Lenders approved 74% of applications in July – a fourth straight month of increasing approvals.
Related: Is Now the Time to Buy, Sell, or Trade in a Car?
The average loan had a 10.9% interest rate, which is 8 basis points lower than June’s figure.
They asked for an average down payment of just 13%, the lowest figure since October 2022.
The share of loans with a length of 72 months or longer held steady at 31.1%. Longer loans can lower monthly payments, but leave buyers in debt for longer and increase the overall cost of a car.
The share of loans with negative equity has been alarmingly high all year, partially a consequence of high car prices at the peak of the COVID-19 pandemic, which pushed many buyers into more debt than they had anticipated. That figure declined slightly in July, but remains high – 56.8% of buyers folded debt from an old loan into a new loan.
Subprime borrowers faced a tougher market in July. Just 16.4% of loans went to borrowers with credit scores of 620 or under. That number has now declined for four consecutive months.
