Credit availability for American car buyers improved last month, with loan approval rates climbing and more people taking longer-term loans, according to a July 10 analysis by industry expert Cox Automotive.
In June, the Dealertrack Credit Availability Index, which indicates whether access to credit is improving or declining, jumped to 104.6, the highest level in over a decade and the fifth straight monthly increase. Rising index values suggest it has become easier for consumers to secure auto loans. The index tracks various factors affecting auto credit access, including loan approval rates and the term periods.
The jump in index values was driven primarily by a “sharp recovery” in auto loan approval rates by lenders, together with the share of long-term loans among overall loans hitting an all-time high, the company said.
In June, 73.8 percent of loan applications were approved, up 1.70 percentage points from May and the largest monthly gain so far this year. As for terms, loans with periods longer than 72 months made up 31.1 percent of all auto loans in June. Meanwhile, the average loan rate rose marginally to 10.98 percent.
“For consumers, this means more buyers gained access to financing in June, though at a marginally higher cost,” Cox said. Meanwhile, “the rise in approval rates points to a growing willingness among lenders to extend credit, reflecting looser underwriting standards and a broader risk appetite across the industry.”
Meanwhile, automotive company Edmunds raised concerns about long-term auto loans in a July 1 statement.
Almost one out of four new vehicle buyers stretched loan terms to a record 84 months or longer in the second quarter, Edmunds said. Monthly payment on new vehicles hit an all-time record high of $777 in Q2, the third consecutive quarter of new highs.
Jessica Caldwell, Edmunds’ head of insights, said the Q2 numbers reflect the “stark reality” of the current new vehicle market, with affordability hurdles forcing buyers to stretch their budgets to get a new car.
“When you see loan terms extending to record lengths, down payments shrinking, and monthly payments hitting all-time highs, you’re looking at a clear recipe for long-term financial strain,” Caldwell said.
US Vehicle Prices
New vehicle prices increased by 1.2 percent in May from a year back, according to a June 10 statement from vehicle valuation company Kelley Blue Book.Erin Keating, executive analyst at Cox, said in a statement that the higher year-over-year transaction prices in key vehicle segments were driven by a “convergence of product cycles and supply dynamics.”
“Redesigned SUVs from Toyota, Kia, Jeep, and Hyundai are commanding higher prices out of the gate, while Ford’s F-Series production constraints are tightening truck inventory, lifting average transaction prices, with freshened Ram pickup stepping in to capture buyers at the premium end,” Keating said.
Incentive spending by sellers rose in May. Such incentives were 7.1 percent of the average transaction price for the month, up from 6.9 percent in April.
In addition to new vehicle prices, used vehicles are also seeing price jumps. The Manheim Used Vehicle Value Index rose by 2.1 percent in June from a year back, according to a July 8 statement from Cox. The index shows the price trend of used cars purchased by dealerships at auctions.
Cox expects the index will close 2026 roughly 2 percent higher than the 2025-end levels, which it said would be consistent with long-term historical norms.
