Access to auto credit declined for the fourth straight month in August, according to the DealerTrack Credit Availability Index for all types of auto loans. The All-Loans Index declined 0.8% to 102.5 in August, reflecting that auto credit was harder to get in the month compared to July. The decline in access in recent months reflects conditions that were last tighter in January. With the decline in August, access was looser by 4.0% year-over-year, and compared to February 2020, access was looser by 3.4%. The index in April had been the highest recorded in the data series going back to January 2015.

The credit availability factors in August mostly moved against consumers. The average yield spread on auto loans widened, so rates consumers saw on auto loans were less attractive in August relative to bond yields. The average auto loan rate increased by 23 Basis Points (BPs) in August compared to July, while the 5-year U.S. Treasury declined by 7 BPs, resulting in a wider average observed yield spread.

The approval rate fell, the subprime share declined, and the down payment share increased, which worked against consumer access to credit in August as well. The only factors to move in support of consumers in August were an increase in loan terms and an increase in the share of loans with negative equity.

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. Across all auto lending in August, yield spreads widened, the approval rate declined, and the subprime share declined, so those factors moved against accessibility. Terms lengthened and the share of loans with negative equity increased, and those moves helped mitigate some of the tightening.