On the Dash:
- Auto credit loosened in October with longer terms, lower down payments, and more subprime lending.
- Approval rates fell to 72.6% while negative equity and financing costs rose slightly.
- Non-captive new and franchised used segments led the increase in credit access.
Auto credit conditions in October 2025 loosened even as overall loan approval rates declined, according to the Dealertrack Credit Availability Index. The All-Loans Index rose to 98.3 from 97.9 in September, a 0.4-point month-over-month increase and a 4.1% gain compared with October 2024.
The approval rate for auto loans fell to 72.6%, down 1.4 points from September. Lenders offset this by increasing access through higher subprime lending, longer loan terms, and lower down payment requirements. Subprime loans rose to 15.1%, up 90 basis points month-over-month and 240 basis points year-over-year. Loans with terms of 72 months or more climbed to 27.5%, reflecting both affordability pressures and lender flexibility.
The yield spread widened to 7.36% and the average contract rate rose to 11.01%, indicating slightly higher financing costs for consumers. Negative equity edged up to 54.2%, while average down payments declined slightly to 13.3%. These shifts show lenders taking on more risk while extending credit.
Credit availability improved across most sales channels in October. Non-captive new vehicles posted the largest gains. Franchised used vehicles also improved, and certified pre-owned vehicles experienced moderate growth. Independent used dipped slightly. Captive lenders led the increase among lender types with a 2.1% rise. Banks followed at 1.9%, while credit unions and finance companies each posted 1% gains.
Credit access has expanded across nearly all channels and lender types year-over-year. Franchised used and non-captive new vehicles showed the most substantial improvement. Banks and finance companies drove most of the year-over-year easing among lenders.
For consumers, these changes mean more financing opportunities despite lower approval rates. Reduced down payments and flexible loan terms can help with affordability. Longer loan terms and slightly higher negative equity may increase overall costs. Lenders are showing greater risk appetite while balancing growth with prudent risk management in a changing market.
Overall, October’s data reflect continued loosening in auto credit. Lenders are extending more financing to subprime borrowers through longer terms and lower down payments, even as consumers face slightly higher financing costs.
