On the Dash:
- Credit availability improved in February, particularly through captives and franchised used channels.
- Subprime lending and extended loan terms are rising, signaling affordability pressures and higher-risk financing.
- Negative equity reached 58.0%, an all-time high, increasing potential risk across auto lending portfolios.
The Dealertrack Credit Availability Index rose to 101.3 in February 2026, its highest level since June 2022, as lenders continued to expand access to auto financing despite signs of rising market risk.
The All-Loans Index increased 1.5% from January’s 99.8 and is up nearly 6% from February 2025. The improvement was driven largely by a surge in lending to higher-risk borrowers, even as approval rates declined and financing costs increased.
However, auto loan approval rates fell to 70.9% in February, down 60 basis points from January and 40 basis points from February 2025, marking the second consecutive monthly decline. At the same time, the share of loans to subprime borrowers increased 180 basis points month over month, rising from 15.7% to 17.5%, and is up 320 basis points year over year. February’s reading represents the highest subprime share since March 2025.
Financing costs increased as the yield spread widened by 39 basis points, rising from 7.14 to 7.53, while the average contract rate lifted by 29 basis points, from 10.9% to 11.2%. At the same time, the 5-year Treasury yield decreased by 10 basis points, falling from 3.78% to 3.68%.
Affordability pressures continue to impact loan structures, with the share of loans longer than 72 months increasing by 130 basis points, from 28.0% to 29.3%. This marks the highest level in the dataset and exceeds the previous peak in July 2022.
Risk indicators also intensified as the share of borrowers with negative equity climbed 170 basis points month over month, rising from 56.3% to 58.0%, and is up 540 basis points year over year, marking the second consecutive all-time high.
Credit access improved across all sales channels, with the largest gains in the franchise-used segment, followed by all-used and all-new segments. Among lenders, captives led the expansion, with credit availability rising 3.9%, while banks and finance companies also loosened lending. Credit unions pulled back modestly.
While the February index reflects improving credit access, the combination of rising subprime lending, longer loan terms, and record negative equity suggests growing risk across the auto financing market.
