Dealertrack (div. Cox Automotive)’s Credit Availability Index improved to 95.9 in February, its highest mark since December 2022, reflecting a high approval rate for auto loans originated by U.S. dealers, among other factors.

Although the index ticked up only slightly from January’s 95.4, it did improve by a full 3% year-over-year. However, analysts noted indicators such as a higher subprime loan share, longer average term, bigger down payments and more negative equity added risk to finance sources’ portfolios in February.

“The negative equity share, representing the proportion of borrowers who owe more on their loans than the value of their vehicles, increased by 110 [basis points] in February,” analysts note. “This rise is an important indicator of financial stress among borrowers. Higher negative equity share can lead to increased default rates, as borrowers may struggle to keep up with payments on loans that exceed the value of their assets.”

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