Consumers found easier access to auto credit in June.
After hitting a two-year low in May, according to the Dealertrack Credit Availability Index, credit access improved last month.
While improving from the previous month, lending remains tighter than June 2022 by 7.1 percent, the report from Cox Automotive indicated.
“Movement in credit availability factors was mixed in June,” said the Cox Automotive press release. “Yield spreads narrowed, average terms lengthened, and down payments declined, and those moves improved credit access for consumers. However, declines in the approval rate, subprime share, and negative equity share hurt consumer credit access.”
Rates for the average auto loan were down slightly in June, 4 basis points. The approval rate for loans were down 2.1 percent. The share of loans at 72 months was up 0.2 percent.
The amount of subprime borrowers receiving loans continue to decline. The subprime share fell from 11 percent in May to 10.5 percent in June. The sector is down 1.3 percent from last June.
Another Cox Automotive report shows 60-day delinquencies increased for a second straight month and are up 18.7 percent from last June.
“In June, 1.74 percent of auto loans were severely delinquent. That was up from May’s 1.68 percent rate and was the highest June rate dating back to at least 2006,” said Jonathan Smoke, Chief Economist in the Cox Automotive Auto Market Weekly Summary. “6.76 percent of subprime loans were severely delinquent. That was an increase for the month from 6.48 percent in May and was the highest June rate dating back to at least 2006. The subprime severe delinquency rate was 101 basis points (BPs) higher than a year ago, while the aggregate was 25 BPs higher.”
Smoke pointed out the high delinquency rate has not led to defaults, which fell by 0.4 percent in June from May. Defaults are up 40.6 percent from last year. Among subprime auto loans, defaults declined by 2 percent.
