Fewer Americans have walked into car dealerships over the past month as we all nervously waited out a tense election season. But conditions are getting better for those who are ready to shop.
New car prices are falling. The same hasn’t been true at the used car lot, where prices rose slightly last month. But that could turn around soon – dealers are paying less for used cars at auction now, which usually means retail discounts are coming.
Best of all, the Federal Reserve has cut interest rates twice in a row. That’s beginning to show dividends for borrowers, as qualifying for a car loan grew easier last month.
The Dealertrack Credit Availability Index tracks how difficult it is to qualify for all types of car loans. It ended October 2.1% lower than a year ago, showing that auto credit is growing easier to find. Kelley Blue Book parent company Cox Automotive publishes the index.
This marks a second consecutive month of easing after tightening the entire summer. Approval rates increased, and lenders accepted slightly more subprime loan applications.
Certified pre-owned loans loosened the most, while credit availability for used loans loosened the least. Credit unions loosened terms the most, while auto-focused financed companies loosened the least. But the latter are the only lender type now offering easier access to credit than they did before the COVID-19 pandemic.
The average auto loan rate dropped 11 basis points from September. They have further to go, as the Fed recently cut its baseline rate by 25 points.
Lenders have down payments roughly the same and extended fewer loans with terms longer than 72 months in October.
The Conference Board Consumer Confidence Index jumped 9.6% in October, when only a slight increase had been expected, and September’s index was revised higher. Consumers’ views of both the present and the future improved. Consumer confidence was up 9.7% year over year. Plans to purchase a vehicle in the next six months increased substantially to the highest level since December 2019.