Auto credit accessibility improved slightly in March but continued to score lower compared to last year, according to a new Cox Automotive report.
The research firm notes that the All-Loans Index grew from 98% to 98.2% over the last month, suggesting consumers were slightly more likely to be approved for an auto credit line. However, this number is still down 5.5% from the same period in 2022.
Cox Automotive attributes the improved approval rate to the slowly resolving banking crisis. Although the issue led to the failure of multiple banks, fears of a cascading effect on other financial institutions have substantially lessened. Other variables, such as yield spreads and average terms, were less advantageous for consumers in March but failed to prevent auto credit access from improving.
While loan approvals for new-vehicles increased enough to improve overall accessibility scores, the report notes lenders were more selective for the used-vehicle market last month than in February. Availability was similarly split between financial institution types, as banks and captives expanded access while credit unions and auto financing businesses closed access. While it was easier to obtain a car loan in March, the lending environment remains less buyer-friendly than it was last year.
While the changes in auto credit accessibility trends were slight, they nevertheless highlight the advantages of a diverse lending landscape. “No type of lender dominates the market, so when…circumstances change, differing strategies and perspectives can lead to some lenders pulling back,” notes Cox Automotive. “In contrast, other lenders see opportunities to grow.”