Critical Shifts:
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Index Performance: The Credit Availability Index reached 102.4, marking its highest level since June 2022. While it rose 7.2% year-over-year, it remained nearly flat compared to March.
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Approval Rate Recovery: Auto loan approval rates climbed to 71.0% (a 60 bps monthly increase), though they remain 120 bps lower than the same period last year, indicating a long-term tightening trend.
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Subprime Pullback: The share of loans to subprime borrowers dropped significantly by 210 bps to 17.4% in April, reversing a sharp surge seen in March.
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Borrowing Costs: The yield spread narrowed by 59 bps, driven by the average contract rate falling to 11.2%. This shift represents more favorable borrowing conditions for consumers relative to March.
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Record Loan Lengths: Loans with terms exceeding 72 months hit a new all-time high of 29.7%. This trend suggests consumers are extending repayment periods to manage persistent affordability pressures.
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Negative Equity Risks: Although negative equity dipped slightly to 58.5%, it remains up 540 bps year-over-year. A substantial portion of borrowers still owe more than their vehicles are worth, maintaining high balance sheet risk.
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Lower Down Payments: The average down payment percentage decreased to 13.4%, continuing a downward trend from 14.7% in April 2025.
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In April 2026, the Dealertrack Credit Availability Index rose to 102.4, its highest level since June 2022, though essentially unchanged from March’s revised-lower 102.3. The All-Loans Index increased just 0.1% from March and is up approximately 7.2% from April 2025. April’s modest gain masked a more complex picture beneath, as gains in some key metrics offset losses in others.
The approval rate for auto loans rose to 71.0% in April, up 60 basis points (bps) from March’s revised-lower 70.4%. Approval rates remain down 120 bps from April 2025, continuing a trend of year-over-year tightening of loan approvals even as month-over-month conditions improved. The share of loans to subprime borrowers fell sharply, declining 210 bps month over month, from 19.5% in March to 17.4% in April. The April pullback follows March’s surge to its highest reading since March 2020. Despite the decline, subprime share remains elevated, up 370 bps year over year.
The yield spread narrowed by 59 bps (from 7.84 to 7.25) in April, a direct reversal from March’s 31 bps widening. The average contract rate declined 50 bps to 11.2%, while the 5-year Treasury yield rose 9 bps to 3.94%. The narrowing spread reflects more favorable borrowing conditions for consumers in April. The share of loans with terms greater than 72 months increased 90 bps month over month, increasing from 28.8% to 29.7% and setting a new all-time high in the dataset and surpassing the previous record of 29.3% set in February 2026. The measure is up approximately 470 bps year over year. The continued extension of loan terms reflects persistent affordability pressures. Even as loan rates dipped modestly in April, consumers continue to stretch repayment horizons to manage monthly payment burdens, extending the period of financial exposure.
The share of borrowers with negative equity declined 70 bps month over month to 58.5%, ending a three-month-streak of record highs. Despite this modest improvement, the share of loans with negative equity increased approximately 540 bps year over year, up from 53.1% in April 2025. The elevated level signals that a substantial share of borrowers continue to carry loan balances that exceed their vehicle’s value, a persistent source of risk for both borrowers and lenders.
The average down payment percentage decreased 50 bps, declining from 13.9% to 13.4%, and is down approximately 130 bps year over year from around 14.7% in April 2025. The decline follows March’s modest uptick.
The April 2026 Dealertrack Credit Availability Index closed at 102.4, its highest level since June 2022. The month’s most significant movement was a sharp pullback in subprime lending, which was the largest drag on the index. Narrowing yield spreads, longer loan terms, and a recovery in approval rates collectively offset that pressure. However, longer loan terms reached a new all-time high in doing so, and negative equity remains deeply elevated year over year despite a slight easing from March’s record, both signals that affordability challenges and balance sheet risk across the auto finance market persist.
