Auto loans were harder to get in July than they were in June, and it was the third month in a row that auto loan approval rates fell. Based on auto loan approval data, auto loans have become increasingly difficult to obtain since loan approvals peaked in April.
Loan availability tightened in July. In July, across all types of auto lenders, auto loan approval rates fell and subprime loans were even harder to come by. These data come from the Dealertrack Credit Availability Index. All of these factors are points against the affordability of the auto loan. However, some loan crunches may be easier to swallow as some consumers who qualify for loans get longer loan terms.
Data from Dealertrack shows that in July auto loans were easier to obtain than other types of loans. Captive and auto-focused finance companies still granted the most auto loans from June, while credit unions reduced the number of loans they approved. Loans for new cars became more difficult to obtain, while loans for used cars declined the least between June and July.
All of these factors can indicate that there is an economic shift underway. This has been evident in American life due to inflation, fluctuations at the gas pump, and differences in lending patterns to borrowers. The lending crunch may be a signal that the Federal Reserve’s interest rate hikes are working, but it’s too early to tell for sure.
What does it mean if you are looking for a car loan? If you’re looking for an auto loan, now is the time, especially if the tightening trend continues. If so, the trend indicates that fewer and fewer loans are approved over time. It is not yet clear in which direction this trend will evolve in the coming months.
What stands in the way of loan approval? Loan approval rates depend on your situation and the lender you work with, but certain factors can make it difficult to get a loan, such as poor credit scores, previous foreclosures and a general lack of track record. credit.
Lately there has been a trend for lenders to be more careful about who they approve loans with, so it’s important to make sure you know what your situation is before you start applying for credit. Knowing where to go for your loan is also critical to car loan approval, not all lenders work with all types of credit.
What can help me get approved for a car loan? It is important that you know your options when it comes to getting a loan. You can try to get a direct loan or pre-approval from a bank or credit union, although this may be difficult to obtain, especially with the current crunch.
Another option is to go directly to a dealership and apply for a loan from their lenders. Some dealerships work with captive finance companies like Ford Credit, GM Financial, or Subaru Motor Finance, while others work with independent finance companies. These loans may be easier to get right now, especially if you have good credit.
Learn more about car loans for bad credit