On the Dash:
- Auto credit access rose for a sixth straight month to 107.1, its highest since April 2015.
- Subprime share hit 17.9% and negative equity reached 58.7% of loans.
- Rising contract rates could limit how far lenders can stretch loan structures.
Auto credit access improved for a sixth straight month in October, reaching its highest level since April 2015, though the gains are slowing. According to Cox Automotive’s latest Dealertrack Credit Availability Index, it rose 0.1% to 107.1 from a revised 107 in September and is 8.9% higher than a year ago.
Three of the index’s six components added to the reading while three offset most of those gains, so dealers shouldn’t assume every part of the credit picture is improving. A higher subprime share did the most to lift the index, while fewer long-term loans and a wider yield spread held it back, according to Scott Vanner, Manager of Economic and Industry Insights at Cox Automotive.
Subprime share and negative equity lead the gains
The overall loan approval rate rose 20 basis points to 73.9%, 240 basis points above a year ago. That came despite lower approval rates in most channels and lender types, largely reflecting a near-prime lender leaving the market. The lender mix drove much of the gain. The share of loans going to subprime borrowers climbed to 17.9%, up 50 basis points from September and the third increase in a row. Subprime shares rose across all four lender types and every channel, and the share is 180 basis points above October 2025. It was the single largest contributor to the index gain.
Negative equity rose 90 basis points to 58.7% of loans, also a third straight increase and the highest reading since March. It’s 490 basis points above a year ago and higher than every monthly reading from 2015 through 2019.
Higher rates and shorter terms offset the climb
The yield spread widened 11 basis points to 6.53% because contract rates rose more than the 5-year Treasury yield. The average contract rate went up 24 basis points to 11.46%, its highest level since March, while the Treasury yield rose 13 basis points to 4.93%, its highest since June 2007.
The share of loans with terms longer than 72 months fell to 31.1%, down 70 basis points from September’s record high and the first monthly decline since March. It’s still the fifth straight month at or above 31%, and it’s up 340 basis points from a year ago.
Down payments ticked up to 13.0% from 12.8%, with gains across all channels and most lender types. They’re still 30 basis points below the 13.3% from October 2025.
What dealers should watch
Certified pre-owned posted the largest monthly gain among channels, up 1.3% to its best reading since October 2022. All Used rose 0.2% to a new series high, while All New fell 0.3% and Non-Captive New fell 0.5%.
Captive lenders led lender types, rising 2.4% to a new series high, while credit unions gained 0.4%. Banks slipped 0.1% and finance companies declined 1%.
More customers are getting approved, but with more stretched loan structures, including 58.7% of loans financing more than the vehicle is worth. Those structures can make a payment fit the budget up front, though they raise total borrowing costs and limit flexibility at trade time. If contract rates keep rising, higher payments could limit how much further loan structures and credit mix can stretch, according to Vanner.
