Credit access improves as new-car ATP rises 1.2% YoY

Credit access and approval rates improved in May, but access was offset by a drop in subprime share, while new-vehicle prices rose year over year. While credit availability is improving, the gain is offset by consumers opting for longer loans amid “stubborn” pricing, Erin Keating , executive analyst at Cox Automotive , told Auto Finance News . "From a credit side, we've continued to see that loosening a bit, which is great for us to be able to bring buyers into the market, but that underlying long-term risk is there,” she said. The Dealertrack Credit Availability Index rose 7.3% YoY and 1.5% month over month to 103.7 in May, the highest level since April 2022, according to a June 10 Cox Automotive release. Credit availability drivers in May, according to Cox Auto, include: A 50-basis-point (bps) YoY increase in the overall auto loan approval rate to 72.4%, up 180 bps MoM; Narrowed yield spread of 50 bps YoY and 53 bps MoM to 6.72%, reflecting rate and subprime mix dips; Subprime market share up 270 bps YoY, but down 70 bps MoM at 16.7%; and Average down payment percentage down 60 bps YoY, but up 10 bps MoM to 13.5%. Approval rate shifts are driving evolving credit access in the industry, Arivo Acceptance Chief Executive Landon Starr told AFN this month. Arivo’s approvals rose by 5% to 10% YoY in the first quarter, which “could be from application quality from our dealerships rather than any changes in our credit box,” he said. Valley Park, Mo.-based subprime lender Midwest Acceptance Corp. also has gained near prime applicants in the past three months as consumers opt for affordable cars, Chief Operating Officer Ray Knapp told AFN. “We're seeing some of those near prime, prime people coming ... to companies like ours for financing because they can't get traditional financing on the collateral that they're looking at,” he said. Longer-term loan share posts record Longer-term loan share reached a record 30% in May compared with 26.3% in May 2025 and 29.7% in April, according to Cox Auto. Negative equity share rose 250 bps YoY, but fell 120 bps MoM to 57.3%. Extended terms can increase risk of negative equity and present challenges for lenders, Keating said. Auto lenders including Bank of America and Navy Federal Credit Union recently added flexibility for longer-term loans as vehicle prices rise. ATP rises 1.2% YoY The industrywide new-vehicle average transaction price (ATP) inched up 1.2% YoY but down 0.5% MoM to $49,220 in May, according to Kelley Blue Book . The YoY uptick was the smallest annual gain this year and is below the long-term average uptick for May of 3.5% YoY. Several segments posted YoY ATP increases above the industry average, with the midsize SUV ATP up 2.9% YoY at $50,185 and the full-size pickup truck ATP at $66,288, up 2.4% YoY, according to KBB. Incentives trail historical average Incentives rose to 7.1% of ATP in May, up 30 bps YoY and 20 bps MoM, according to KBB. Several manufacturers are offering 0% APR deals in June on select 2026 models, including Chevrolet, GMC, Hyundai and Nissan, according to Carfax . New-vehicle average transaction price and incentive spend [caption id="attachment_58362204" align="aligncenter" width="1280"] (Courtesy/Cox Automotive)[/caption] Still, incentives remain “fairly low” compared with historical norms given sales volume, Keating said. The new-vehicle sales seasonally adjusted annual rate rose 3.1% YoY in May to 16.1 million units, according to the National Automobile Dealers Association . Manufacturers are being “surgical” in applying incentives where needed, she said, as they are “trying to preserve margin to continue to accommodate tariffs without having to raise prices by a ton.” Inflation adds to challenge Meanwhile, U.S. inflation reached a three-year high in May; the consumer price index was up 4.2% YoY and 0.5% MoM, according to Bureau of Labor Statistics data. “The costs of operating and owning a vehicle have continued to rise [along with] the overall share of wallet towards other household expenses,” Cox Auto’s Keating said. — Additional reporting by Aidan Bush Auto Finance Summit, the premier industry event for auto lending and leasing, returns October 5-7 at Caesars Las Vegas. To learn more about the 2026 event and register for early-bird pricing through Aug. 21, visit www.AutoFinance.live/AFS .

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