Car loan standards have eased a little, but not all signs are good for borrowers

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It grew easier to access a car loan in August — the third straight month of easing standards. But credit availability is slowly recovering from record-tough conditions earlier this year. It remains historically difficult to qualify for a car loan.

The Dealertrack Credit Availability Index tracks how difficult it is to qualify for all types of car loans. It loosened in August, reflecting that auto credit was easier to get than any time in 2023.

Kelley Blue Book parent company Cox Automotive owns Dealertrack.

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Lending standards hit record tightness in May. In July, a Federal Reserve study showed that more applicants were getting rejected for car loans this year than at any other point since the Fed began collecting data.

But standards have begun to relax since. Last month, all types of lenders loosened credit availability. The share of subprime loans – for borrowers with credit scores under 620 – increased to 11%. Subprime and deep subprime loans were nearly a quarter of the market as recently as 2018 but had fallen to just 8% this spring.

Not all signs were good for borrowers. The approval rate decreased slightly. But lenders asked for lower down payments, and the average loan term lengthened — a move that can lower monthly payments but keeps borrowers in debt for longer.

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The Conference Board  Consumer Confidence Index declined by 6.9% in August, as views of the present situation and future expectations both declined. Consumer confidence was up 2.4% year over year. Plans to purchase a vehicle in the next six months declined modestly but remained up year over year.

KBB’s car review  methodology.

This story originally ran on 


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