Car Loans More Plentiful
May access opens up, as risk segments figured largely in the increased availability, Cox Automotive reported.
The share of loans in negative equity reached a record high in May at 30%.
Pexels/Kaboompics.com
Auto loan approval rates rose in May as yield spread tightening and slight interest rate dips helped boost availability to its highest point in more than four years. The picture, though, includes cracks of risk.
Cox Automotive’s index hit nearly 104 as approval rates increased 180 basis points to 72%. A 70 basis-point pullback in subprime loan share helped offset the gains, though subprime share was still about 17% compared to 14% a year earlier.
Risk also manifested in record-high long loan terms, those longer than 72 months hitting 30%, up from 26% a year earlier, Cox said. Meanwhile, the share of loans in negative equity, though down 120 basis points from April, clocked in at 57%, up from 55% last May.
Down payments barely budged up by 10 basis points to 13½%, about 60 points under last May, Cox reported.
“The combination of longer terms, lower down payments, and more negative equity carried forward increases total loan cost and risk exposure over the life of the financing, regardless of how manageable the monthly payment appears,” Cox said.
“Extended loan terms at a new all-time high and elevated negative equity remain key watchpoints even as the headline index improves.”
Credit access was up across channels. Among lender types, captives fell 0.3%, though all lender categories were well above levels seen a year earlier, captives and banks leading the 12-month increase.
More F&I
Four-Figure Loan Payments on the Rise
A LendingTree analysis found that location, age and credit score play a role in the rising amount of auto loan borrowers who make monthly payments of $1,000 or more.
Read More →
APCO Holdings Acquires Fidelity Dealer Services
The finance-and-insurance product provider says the addition strengthens EasyCare’s reach across key markets.
Read More →
Tariffs Could Raise Insurance Premiums
As U.S. import tariffs affect repair costs, consumers might find it more affordable to replace a damaged vehicle, according to recent Insurify tariff analysis.
Read More →
Smaller Loans, Longer Terms
The youngest generation of car buyers is more likely to finance less expensive vehicles, more than half of generation Z consumers borrowing less than $25,000.
Read More →
Ensure Your Clients Are Sure About Reinsurance
Industry experts recently broke down the complicated profit center at Agent Summit. Learn what’s relevant and what’s new to share with your dealers.
Read More →
First-Quarter Sees Long Auto Loan Growth
Experian data show more consumers are tapping the method, along with refinancings, to afford buying. Meanwhile, subprime borrowers are getting more access.
Read More →
Auto Consumer Anxiety Presents Opportunity
A survey of U.S. drivers found the majority are concerned about finances and the economy, but those fears make many ready to buy vehicle-protection products.
Read More →
New-Vehicle Financing Hits Record
Consumers are seeking ways to make financing new-vehicle purchases manageable, from extended loan terms to smaller down payments, according to Edmunds.
Read More →
Survey Reveals What Won't Fix What's Breaking Car Sales
AutoPayPlus says extra-long auto loans are trapping consumers and threatening the dealer trade-in cycle, and that the industry is leveraging the wrong tools to combat high MSRPs.
Read More →
Lease Buyouts Deemed Favorable
Better financing conditions and the potential to save money on monthly payments could drive more consumers to buy out their vehicle leases instead of opting for a new lease payment.
Read More →