The economic news is a roller coaster, but lenders who provide car loans held their expectations flat in January.
The Dealertrack Credit Availability Index tracks how difficult it is to qualify for all types of car loans. After several months of improvement, it stayed even in January. Kelley Blue Book parent company Cox Automotive publishes the index.
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Lenders made marginal adjustments to their practices that, in the aggregate, mean little change for borrowers. They approved slightly fewer loans last month, but increased the number of subprime loans (those for borrowers with credit scores of 620 or lower) they accepted. They accepted slightly smaller down payments and accepted a higher percentage of loans with terms over 72 months.
But, crucially, they asked for higher rates. The average auto loan in January was approved at a rate 46 base points higher than a month before. This is the first rate increase since March 2024.
It’s likely a sign of things to come. The Federal Reserve held interest rates steady in January, ending several months of rate cuts. The Fed projected that, amid unstable politics and the threat of a new trade war, it would make fewer cuts this year than it had initially planned.
