Auto credit access declined slightly in April 2025, according to the latest Dealertrack Credit Availability Index. The All-Loans Index dipped to 95.7 from 96.3 in March, marking a 0.7% month-over-month decrease. While this indicates some tightening, credit availability remains 0.7% higher than the same time last year.
The decrease in access was primarily driven by a decline in the subprime loan share, which fell by 280 basis points (BPs) in April. This suggests lenders are exercising more caution with higher-risk borrowers. Despite the decline in subprime activity, the overall approval rate for auto loans rose by 20 BPs, reflecting lender confidence in the broader credit market.
Interest rate conditions also shifted slightly in consumers’ favor. The average contract rate declined from 11.49% in March to 11.12% in April, while the 5-year treasury note dropped to 3.91% from 4.04%. This 54 BP drop in the yield spread indicates lower borrowing costs, which could help offset the impact of tightened subprime lending.
One notable trend was the increase in longer-term loans. The share of loans with terms exceeding 72 months rose by 130 BPs in April, signaling that more consumers are stretching payments to manage affordability. However, this approach can increase the overall cost of the loan over time.
Additional pressure emerged in negative equity levels, which ticked up by 10 BPs, highlighting growing financial strain among borrowers. Meanwhile, the average down payment held steady at 14.7%, suggesting no significant shifts in consumer savings or lender requirements.
Credit access varied across sales channels and lender types. New vehicle loans experienced the most tightening, while independent used sales remained flat. Among lenders, captives tightened access the most, while auto-focused finance companies offered slightly more favorable conditions.
Despite April’s dip, credit access remains more favorable than a year ago across most segments. The most significant year-over-year loosening was seen in non-captive new vehicle sales, while independent used sales saw the least change. Credit unions showed the most improvement in credit availability over the past year among lender types.
April’s data highlights a cautious but responsive credit environment. Lenders are balancing risk with competitive rates, while consumers continue to seek flexible terms to navigate affordability challenges.
