Access to automotive loans improved further and among all channels in February even as vehicle prices continued their upward climb. Availability grew largely due to a spike in the subprime segment.

Cox Automotive’s Dealertrack Credit Availability Index rose nearly two percentage points to 101, its highest reading since June 2022, the company reported. That’s up almost 6% year-over-year.

The overall loan approval rate actually fell for the second straight month, this time by 60 basis points to 71%, Cox said. But the subprime segment jumped 180 basis points to nearly 18%, up 320 basis points year-over-year.

Cox Senior Director, Economic and Industry Insights Jonathan Gregory said that though a February subprime increase is a seasonal constant, last month’s spike surpassed the normal growth rate. It was the highest subprime share since March of last year.

“This sustained expansion suggests lenders are increasingly comfortable extending credit to higher-risk borrowers,” he said.

Extra-long loan terms also rose for the month as many consumers struggled to fit in a car payment based on today’s high vehicle prices. Those longer than 72 months were up an eye-popping 480 basis points year-over-year for the third  straight month of increases.

“This is the highest share of extended-term loans recorded in the dataset, surpassing the previous record set in July 2022,” Gregory said.

At the same time, borrowers with negative equity grew 540 basis points year-over-year, a record high for the second straight month.

And the average down payment grew in the inflated market, also for the second consecutive month, to nearly 14%, though it fell 70 basis points year-over-year, Cox said.

Captive lenders led the February market with a 4% increase, their greatest monthly availability expansion in several years and their highest index reading since April 2022. 

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