The new year brought more automotive credit opportunity for consumers, but it’s coming at a price.

Cox Automotive’s Dealertrack Credit Availability Index was unchanged in January at 100, a reading reflecting the loosest access since October 2022. 

Though approval rates fell 110 basis points month-over-month to about 72%, that was up year-over-year by 40 points. 

Other metrics revealed a heavier consumer debt burden:

• The yield spread rose 31 basis points to 7.14, reflecting less favorable consumer pricing.

• Subprime share rose 70 basis points to nearly 16%, up almost 300 basis points year-over-year.

• The share of loan terms longer than 72 months rose 50 basis points to 28% and was up 400 basis points year-over-year.

• Borrowers in negative equity increased 220 basis points to 56%, up 470 points year-over-year.

• The average down payment percentage edged up by 10 basis points to 13.4%.

Credit availability improved in all channels and among most lender types, the latter led by captives, Cox reported.

The widening yield spread may show that lenders are offsetting the risk of increased subprime loans and negative equity, Cox’s Senior Manager, Economic and Industry Insights Jonathan Gregory.

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