It’s getting harder to qualify for a car loan.
The Dealertrack Credit Availability Index showed that auto credit standards were tighter in January than at any point in two years. The index is a product of Kelley Blue Book parent company Cox Automotive.
The nationwide approval rate increased slightly in January. But the terms of the loans consumers qualified for were less attractive. The average interest rate increased by two basis points – an expected result after the Federal Reserve raised the nation’s baseline interest rate again.
Down payments remained steady compared to December, but December’s figure was an all-time high. Loan terms grew longer – one of the few ways lenders can lower payments in a climate where credit access is growing tighter. The share of subprime loans declined. About 10.3% of loans originated in January went to buyers with subprime credit, down from 11% the month before.
Auto-focused finance companies loosened their credit access standards slightly, but credit unions and banks tightened theirs.
The Conference Board Consumer Confidence Index showed plans to purchase a new vehicle unchanged from December but down year-over-year.
