- Lenders approved more car loan applications in May
- The proportion of borrowers with negative equity grew — a bad sign amid good news
It grew slightly easier for borrowers to find a new car loan in May.
The Dealertrack Credit Availability Index tracks how difficult it is to qualify for all types of car loans. It increased in May, meaning borrowers had an easier time qualifying for car loans last month. Kelley Blue Book’s parent company, Cox Automotive, publishes the index.
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The approval rate for all car loans increased by 28 basis points in May, meaning lenders were more willing to grant new loans.
They also extended more loans to subprime borrowers — those with credit scores under under 620. Subprime loans increased by 33 basis points.
But lenders asked for higher down payments. They were more willing to extend a loan 72 months or longer. That can drive down monthly payments but keep borrowers in debt for a longer time.
They also extended more loans with negative equity — folding the balance of an old loan into a new one. That can be a sign of distress for buyers.