On the Dash:
- Higher approval rates could help dealerships convert more shoppers into buyers as financing becomes more accessible.
- Record-long loan terms continue to play a key role in maintaining vehicle affordability but increase long-term lending risk.
- Dealers should continue monitoring negative equity trends, which remain elevated despite recent improvement.
Auto credit availability reached its highest level in more than a decade in June, as stronger loan approval rates and longer loan terms pushed the Dealertrack Credit Availability Index to 104.6, according to Cox Automotive.
Credit becomes easier to obtain
According to the report, the All-Loans Index increased 0.9% from May and 7.3% year over year, marking its fifth consecutive monthly gain. Notably, loan approval rates rose to 73.8%, the largest monthly increase of 2026 and the biggest driver of June’s improvement.
Lenders also increased the share of loans with terms longer than 72 months, helping more consumers qualify for financing. Loans exceeding 72 months accounted for 31.1% of all financing in June, the highest share ever recorded in the dataset.
The trend reflects continued efforts by lenders and consumers to offset higher vehicle prices with lower monthly payments. As average down payments slipped to 13.2%, remaining below year-ago levels, the average contract interest rate increased to 10.98%, while the yield spread widened slightly.
Negative equity improved for a third straight month, easing slightly to roughly 56.7% of loans, though the share remains elevated compared with a year ago. However, subprime lending declined modestly from May but remains above year-ago levels.
Captive finance companies recorded the largest monthly improvement in credit availability, followed by finance companies. Notably, independent used vehicles saw the greatest improvement among retail channels, while non-captive new vehicle financing was the only segment to decline.
Bottom line
June marked the strongest credit environment since December 2015, signaling lenders remain willing to finance vehicle purchases despite persistent affordability challenges. However, record-long loan terms and elevated negative equity continue to raise concerns about long-term credit risk.
