Car shoppers had an easier time qualifying for a loan in February than in January.
The Dealertrack Credit Availability Index tracks how difficult it is to qualify for all types of car loans. It ended the month 3% higher than a year ago — a substantial change in favor of car shoppers. Kelley Blue Book parent company Cox Automotive publishes the index.
The approval rate for auto loans increased by 10 basis points during the month. More significantly, the share of subprime loans (those given to borrowers with credit scores under 600) increased by 150 points. That indicates that borrowers are far more willing to take on risk at the moment.
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They also showed more willingness to take on negative equity (rolling old debt into a new loan).
The average loan rate decreased by 36 basis points from January. That trend may not last long. The Federal Reserve held interest rates steady at its last meeting, and suggested that it may not cut rates as much as it had hoped in 2025.
Lenders asked for slightly larger down payments in February than in January but were more willing to extend a loan longer than 72 months. That can help lower monthly payments but keep borrowers in debt for longer.
