- It grew easier for most Americans to qualify for a car loan last month
- But lenders approved fewer subprime loans for borrowers with credit scores under 620
Lenders approved more new car loans in July, and asked for the lowest down payments they’ve accepted since November of 2022.
Kelley Blue Book parent company Cox Automotive tracks the market for car loans through its Dealertrack Credit Availability Index. The Index rose in July, reflecting improved credit access for the third straight month.
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The approval rate rose to 74.4%, up from 72.3% in June.
There was bad news in the market for those with credit scores under 620. Lenders approved fewer loans in that band as they continue to watch the implications of a sharp drop in credit scores due to the end of the student loan pause.
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They were also a bit more conservative in loan terms. They were less likely to extend loans longer than 72 months (which can lower payments but keeps borrowers in debt for longer), and were less likely to accept negative equity by rolling old debt into a new car loan.
Banks, credit unions, and companies that specialize in car loans all loosened their lending standards in July. Only the captive lenders owned by automakers themselves tightened their approvals.
