On the Dash:
- Auto credit access rose for a fifth straight month to its highest level since April 2015.
- Loans longer than 72 months reached a record 31.8% share of September originations.
- Negative equity climbed to 57.8% of loans while down payments fell to 12.8%.
Auto credit access hit its highest level since April 2015 in September, according to Cox Automotive. The Dealertrack Credit Availability Index increased for the fifth month in a row.
The All-Loans Index increased 1.9% to 107.1 from 105.1 in August. It stood 9.4% above September 2025, and all six components contributed to the monthly gain. The overall loan approval rate rose 30 basis points to 73.9%, its highest level since August 2025. Applications fell slightly faster than approvals, which helped lift the rate.
Subprime share leads gains
A higher subprime share drove the September increase. Subprime borrowers made up 17.4% of loans, up 80 basis points from August and 230 basis points from a year ago. Subprime volume was little changed, so the higher share reflects fewer loans to other borrowers. A narrower yield spread was the second-largest contributor. The spread fell 19 basis points to 6.42%, its lowest level since December 2024.
The average contract rate rose 23 basis points to 11.22%. The five-year Treasury yield rose 42 basis points to 4.80%, its highest level since July 2007. Contract rates rose less than Treasury yields, narrowing the spread.
Moreover, loan structures loosened further in September in three ways:
- A record 31.8% of loans carried terms longer than 72 months, up 490 basis points from a year ago.
- Negative equity rose to 57.8% of loans, above every monthly reading from 2015 through 2019.
- Down payments slipped to 12.8%, the lowest level since September 2022.
Vehicle prices have continued to rise this year, and Cox Automotive said the pressure shows up in loan structure. Consumers face higher total borrowing costs, more time underwater and less room to sell or trade a vehicle if circumstances change.
Lenders are taking on more risk through a higher subprime share, longer terms and more negative equity, while earning a smaller spread over Treasury yields. That combination becomes harder to sustain if Treasury yields keep rising faster than contract rates. If contract rates catch up, higher payments could make vehicles harder for borrowers to afford.
Every channel and lender type posts gains
Credit access improved across every sales channel in September. Monthly gains were:
- All Used, up 2.0%
- Independent Used, up 1.8%
- All New, up 1.7%
- Franchised Used, up 1.5%
- Non-Captive New, up 1.1%
- Certified pre-owned, up 0.8%
All Used, Independent Used and Franchised Used each set series highs.
All four lender types also gained. Captives rose 4.1% to a new series high, credit unions rose 3.1%, banks rose 1.8% and finance companies rose 1.2%. Year over year, All New led the channels at 10.8% and captives led the lenders at 20.2%.
