- Car shoppers had an easier time qualifying for a loan in April than at any time since June of 2022.
- Lenders approved 71% of applications, but the share of loans to subprime buyers fell considerably.
It hasn’t been this easy to qualify for a car loan since June of 2022.
The Dealertrack Credit Availability Index tracks how difficult it is to qualify for all types of car loans. It increased in March, meaning that borrowers had an easier time qualifying for car loans last month. Kelley Blue Book’s parent company, Cox Automotive, publishes the index.
In April, it approached a 4-year high.
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Lenders approved 71% of credit applications, up from 70.4% in March. But the share of subprime buyers (those with credit scores of 620 or under) fell from 19.5% in March to 17.4% in April.
Lenders asked for an average down payment of 13.4%, which is 0.5 percentage points lower than last month.
A record 29.7% of loans had terms exceeding 72 months. Longer loans can decrease monthly payments, but keep consumers in debt longer and result in higher overall costs for a car.
The share of buyers folding in negative equity from a prior loan fell to 58.5%, ending a 3-month streak of record highs.
The elevated level signals that a substantial share of borrowers continue to carry loan balances that exceed their vehicle’s value, a persistent source of risk for both borrowers and lenders.
