July Was Hot for Auto Borrowers
U.S. automotive consumers generally found easy, if not cheap, credit in July as the approval rate neared 75% and access reached its widest point in more than a decade.
The sizzling numbers compiled by Cox Automotive credit data trackers set the company’s credit availability index at 105, its highest point since November 2015.
A 37 basis-point increase in the auto loan approval rate to 74% brought it in line with the level recorded a year earlier, Cox said.
The data provider, though, counted a 20 basis-point yield spread narrowing as the main factor in the looser credit availability. The spread closed the month at 6.57%, its leanest since January 2025.
To balance risk, lenders pulled back on subprime loan share by 21 basis points from May to 16.4% for its fourth straight month of declines, despite subprime applications being up, Cox reported. But that’s still up by a dramatic 267 basis points year-over-year.
Lenders also held the line on other risk factors. Auto loans longer than 72 months were flat at 31%, though that’s the metric’s historical high and up 484 basis points year-over-year, Cox said.
Loans in negative equity, meanwhile, fell 23 basis points to about 57%, a fourth straight monthly drop, though that’s not far off the historical high of 59% in March and up 269 basis points year-over-year.
As Cox put it, “…a majority of loans were written for more than the vehicle was worth.”
Down payments in the month fell 22 basis points to 13%, the lowest level in nearly four years.
Captive lenders loosened credit availability by nearly a percentage point for the second biggest increase among lender categories for the month, Cox reported.