Summary
- Automotive loans of all types are on a downward trend in approvals, with a concurrent increase in interest rates
- The auto loan availability index has hit its lowest point in five years in January 2024 at 93%, compared to a baseline January 2019 100%
- Analysis of available date shows that there are four major factors driving this: Credit availability moving against consumers, approval rates decreasing overall, term lengths shortening with 72 month terms seeing the lowest approvals, and the tightening of alternative loan channels
- From the data, we believe there are a few options that can get a consumer a car this year, but all include some form of risk or acceptance of less-than-desirable interest rates
- Our analysis also shows that the trend might continue downward for a significant portion of 2024, so it may not be worth buying this year, new or used.
In the ever-changing landscape of automotive financing, access to credit plays a pivotal role in both driving vehicle sales through to signing on offers, as well as shaping overall consumer behavior. It is not understating the fact that securing auto credit can be the make-or-break part of any sale.
The January 2024 Dealertrack Credit Availability Index (CAI), as reported by Cox Automotive, provides an in-depth overview of the state of auto credit availability in the United States. The latest findings reveal a concerning trend of worsening credit availability, shedding light on the challenges faced by both consumers and industry stakeholders.
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