- It was easier to qualify for a car loan in March than at any point since June 2022.
- Subprime loans (loans to borrowers with credit scores under 620) saw a significant increase.
The average new car price remains near the $50,000 line, but it’s getting easier to borrow the money you need to buy a car.
The Dealertrack Credit Availability Index tracks how difficult it is to qualify for all types of car loans. It increased in March, meaning that borrowers had an easier time qualifying for car loans last month. Kelley Blue Book’s parent company, Cox Automotive, publishes the index.
Last month’s index also marked its highest reading in nearly four years.
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Lenders approved 70.8% of applicants, up 40 basis points from February’s numbers. Subprime loans made up 19.5% of all loans, up 200 basis points, and the highest that figure has reached since March 2020.
The average interest rate rose from 11.2% to 11.7%, reflecting the increase in higher-risk subprime loans.
Lenders accepted an average down payment of 13.9%, up 0.3% from the month before.
As new car prices have risen, lenders have begun offering longer loans – a move that can lower monthly payments but keeps consumers in debt longer and results in them paying more in interest over the life of the loan. That figure peaked in February, when 29.3% of all loans had terms of 72 months or longer. In March, it fell to 28.8%.
