Auto Loan Access Hits Speed Bump in November After Months of Recovery
Auto loan access declined in November disrupting months of recovery, as lenders, consumers and dealers grappled with economic challenges
Auto loan access declined in November after multiple months of improving conditions, according to Cox Automotive’s DealertrackAuto Credit Availability Index.
After hitting a peak in the summer of 2022, auto loan access has been on a steady decline, with occasional but short-lived improvements throughout the year. From June through October, credit availability increased across most channels on a month-over-month basis while remaining behind the prior year’s levels. But by the start of December, availability had suddenly declined by 0.8% from October 2023, 4.2% from November 2022 and 4% from the early days of the COVID outbreak. These shifts, combined with the lowest approval rates so far in 2023, indicate that consumers are still struggling to finance their vehicles in the post-pandemic economy, although the factors contributing to these difficulties remain in flux.
Based on Cox Automotive’s analysis, greater yield spreads, lower shares of subprime consumers, shorter term lengths and higher down payments caused auto loan access to tighten in November, although the impact was most notable in the certified pre-owned vehicle market. Even so, consumers felt more confident in the car market during the month than previously, with sentiments improving 2.9% from October and 0.6% from 2022.