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Auto credit availability tightens sharply in November
Credit is at its tightest since Oct 2021
Auto credit availability at dealers tightened sharply in November, reversing two months of loosening credit standards, and marking the tightest credit market since October 2021.
The Dealertrack Credit Availability Index declined 2.6% sequentially in November to 101.2, according to Cox Automotive. Credit last month was 0.2% tighter than it was in November 2021 but 2% looser than in February 2020, according to Cox.
All lender types — including banks, credit unions and auto-focused finance companies — tightened credit last month, with credit unions tightening the most and auto-focused finance companies tightening the least.
The Dealertrack Auto Credit Index tracks shifts in loan approval rates, subprime share, yield spreads and loan details, including term length, negative equity and down payments. The index is baselined to January 2019 to show how credit access shifts over time, according to Cox.
All factors that contribute to wider credit availability fell last month: approval rates declined 3.3% year over year, yield spreads widened to 41 basis points over the five-year treasury, and subprime share declined 0.9% YoY to 11.5%. Loan terms also shortened and the share of loans with negative equity declined.
November’s index points to a fourth quarter that will likely post overall tightening of credit, in line with the Federal Reserve’s senior loan officer survey. Banks have been reporting a slight increase in credit standards as well as a decline in auto loan demand for the last three quarters.
