Auto credit continues to tighten for lenders.
According to the new May Dealertrack Credit Availability report released by Cox Automotive, access to loans dropped to its lowest point since February 2021. It was a 0.4 percent drop from April. Access to loans were 8 percent tighter compared to May 2022.
“On a year-over-year basis, credit access was tighter across all lender types, with auto-focused finance companies tightening the least while credit unions tightening the most,” said the Dealertrack report.
“Most channels saw declining credit availability in May. Independent used loans saw the only expansion in credit access during the month, while certified pre-owned (CPO) loans saw the most tightening. On a year-over-year basis, all channels were tighter, with CPO loans having seen the most tightening.”
The subprime share continued to see a decline from 11.7 percent to 11 percent. It is down 1.2 percent in the past year.
That followed a trend from the first quarter of the year. Experian’s State of Automotive Finance first quarter report showed the number of subprime loans declining to 16 percent. Prime loans made up more than 65 percent of the market.
In the used market, prime loans made up 56 percent of loans. The subprime loans comprised 43 percent of loans, nearing a record low.
The average used car loan dropped in the first quarter from $28,010 at the start of 2022 to $26,420. But with the average interest rate increasing from 8.67 percent in the past year to 11.17 percent, the average monthly payment grew from $505 to $516.