According to the Dealertrack Credit Availability Index, auto credit availability in the U.S. fell for the fourth consecutive month in July 2024, with all types of lenders tightening credit access. The All-Loans Index dropped to 92.9, marking a 1.0% decrease from June’s revised figure and a 1.5% decline compared to July 2023.
Several factors drove the decline in credit availability, including lower approval rates, a reduced share of subprime loans, and increased yield spreads, making it more difficult for consumers to secure auto loans. The slight increase in the number of loans with negative equity was the only factor that positively impacted consumer credit access, even though the down payment percentage and term lengths remained unchanged.
Additionally, credit tightened across all sales channels in July, with used loans financed through franchised dealers experiencing the most significant tightening. In contrast, new loans not financed through captive lenders faced the least tightening. Compared to a year ago, credit access was more restricted across all channels, with certified pre-owned loans showing the most tightening.
All lender types also reported reduced credit availability, with banks tightening credit for the fifth consecutive month—the most significant contraction among all lenders. Conversely, auto-focused finance companies tightened credit the least, though they have expanded compared to pre-pandemic levels. On a year-over-year basis, this trend continued, with banks showing the most tightening and auto-focused finance companies the least.
The average yield spread on auto loans increased by nine basis points (BPs) in July, making rates less attractive relative to bond yields. Although the average auto loan rate decreased slightly by 7 BPs compared to June, the yield spread widened due to a more significant decrease in the 5-year U.S. Treasury yield. Additionally, approval rates decreased by 39 BPs, marking a 4-percentage point decline year over year.
While loan terms exceeding 72 months held steady for the fourth consecutive month, the share of loans with negative equity rose by 20 basis points in July, reversing a decrease in June. Down payment percentages remained flat month over month but have increased by 30 basis points compared to the previous year.
The Dealertrack Auto Credit Index tracks shifts in key metrics, including loan approval rates, subprime share, yield spreads, and loan details like term length, negative equity, and down payments. It is baselined to January 2019 to reflect changes in credit access over time.
