Car Deals Are Easier to Find but Lenders Are Tightening Their Terms

New cars are more available this spring, and manufacturers have even begun offering deals to entice buyers.

But at the same time, lenders have been tightening the terms of car loans as they deal with a rising number of delinquencies. That has made it harder for some people to get affordable loans.

Access to auto loans for both new and used cars was generally worse in January than in December and down year over year, according to Dealertrack, a Cox Automotive service that tracks credit availability based on factors like loan approvals, terms and down payments. The impact was seen at banks, credit unions and dealerships.

“We are seeing credit access tighten in all channels,” said Sean Tucker, a senior editor at Kelley Blue Book, Cox’s car research and sales website.

Subprime borrowers in particular — consumers with the lowest credit scores — may face challenges finding financing, Mr. Tucker said. The share of subprime new-car loans has fallen to about 6 percent, roughly half what it was before the pandemic.

Borrowers with strong credit are especially attractive to lenders. The average credit score for new-car shoppers taking out a loan or lease rose to 743 at the end of 2023, up from 739 a year earlier, according to fourth-quarter data from Experian Automotive, which tracks car financing. For used cars, the average score was 684, up from 681. (Experian’s report uses VantageScore 3.0 scores, ranging from 300 to 850; scores of 661 and above generally are eligible for favorable terms.)