Auto Credit Availability Tightened Sharply in November

Access to auto credit tightened sharply in November, according to the Dealertrack Credit Availability Index for all types of auto loans. The All-Loans Index declined 2.6% to 101.2 in November, reflecting that auto credit was harder to get in the month compared to October. The decline in access reflected conditions that were tightest since October 2021. With the decrease in November, access was tighter by 0.2% year over year, and compared to February 2020, access was looser by 2.0%.

Dealertrack Credit Availability Index

Auto loan access declined sharply in November, leaving access down year over year.

All Factors Moved Against Consumers in November

All credit availability factors moved against consumers in November as the approval rate declined, yield spreads widened, the subprime share declined, terms shortened, and the share of loans with negative equity declined. The average yield spread on auto loans widened, so rates consumers saw on auto loans were less attractive in November relative to bond yields. The average auto loan rate increased by 28 basis points (BPs) in November compared to October, while the 5-year U.S. Treasury declined by 14 BPs, resulting in a wider average observed yield spread.

The subprime share declined to 11.5% in November from 11.9% in October and was down 0.9 percentage points year over year. The approval rate fell 0.8 percentage points and was down 3.3 percentage points year over year. Those were the biggest changes over the last year, in addition to the rate changes.

All loan types saw tightening in November, and new loans tightened the most. On a year-over-year basis, most channels were little changed in credit access except used loans through franchised dealers and certified pre-owned (CPO) loans having loosened the most.

Credit Access Tightens Across All Lender Types

Credit access tightened across all lender types in November, with credit unions tightening the most. On a year-over-year basis, credit access varied greatly by lender, with auto-focused financed companies loosening the most and credit unions tightening the most.

Each 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.

Measures of Consumer Confidence Were Mixed in November

The Conference Board Consumer Confidence Index® declined 2% in November, and the October index was also revised down. Most of the index decline was driven by a 3.2% decline in views of future expectations. Plans to purchase a vehicle in the next six months declined, erasing the improvement in October, but remained up year over year. The confidence index has not declined as much this year as the sentiment index from the University of Michigan, but that series also fell in November. The Michigan index declined 5%, driven primarily by the views of current conditions declining 10%, while the expectations index was down only 1%. Consumers’ views of buying conditions for vehicles declined modestly but remain better than earlier this summer. The daily index of consumer sentiment from Morning Consult measured improving sentiment in November, as that index was up 2.6% for the month. Sentiment improved in November as we passed the mid-term elections and while the price of gasoline fell to its lowest level since February. The national average price was $3.47 per gallon for unleaded gas at the end of November, according to AAA.

The Dealertrack Credit Availability Index is a monthly index based on Dealertrack credit application data and will indicate whether access to auto loan credit is improving or worsening. The index will be published around the 10^th of each month.