Auto Credit Still Loosening

Credit unions loosened their lending standards for auto loans from February to March at a rate higher than banks and other lenders, according to a Cox Automotive report.

The Irvine, Calif., data analytics company found credit loosened 6.4% from February to March at credit unions — the most of any lender type. Availability fell 0.4% at auto-focused finance companies.

Getting an auto loan last month was still harder than it was a year earlier, but the gap was narrowest at credit unions, according to Cox Automotive’s Dealertrack Auto Credit Availability Index.

Lenders clamped down sharply on auto loan credit terms in March 2020, when COVID-19 was declared a pandemic.

Since July, credit for auto loans has been loosening. By March, auto loan credit was the most accessible since April 2020, but it was still 0.7% tighter than it was in March 2020.

At credit unions, the index was down 0.9% compared with a year earlier, compared with -2.2% at banks and -1.5% at captives. Finance companies were the only lender type to show looser credit, up 2.8%.

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. It’s baselined to January 2019.

From February to March, approval rates rose and the subprime share increased — both of which make credit more accessible.

However, factors showing tightening credit availability were a smaller negative equity share, a smaller share of terms longer than 72 months and wider yield spreads.

Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately-owned, Atlanta-based company with annual revenues of nearly $20 billion.