Automotive consumers had an easier time taking out loans for the third straight month in July as thresholds eased.

“Consumers benefited from slightly lower borrowing costs and increased approval rates, while lenders balanced growth with cautious adjustments to risk exposure,” wrote Senior Manager, Economic and Industry Insights Jonathan Gregory in the monthly report.

Cox Automotive’s All-Loans Index ticked up by a point to 98 as approval rates rose two percentage points to 74% and the average down payment percentage fell 20 basis points.

The increased access was observed in all sales channels and most lender types, particularly among captives and finance companies.

Meanwhile, the subprime share of auto borrowers fell 50 basis points, the share of loans longer than 72 months shrank 60 basis points, and the negative-equity share fell 70 basis points, three areas that can signal greater risk in the market. 

It was still the second-highest proportion of under-water loans in the index’s history, though, Cox said.

“Those who previously relied on rolling negative equity into new loans may face tighter constraints,” Gregory wrote.

The certified preowned lending channel was the only one whose credit access tightened, said Cox, which mused that constricted supply could be at play.

July’s numbers show that appetite risk was varied among lender types, credit unions proving to be the most conservative.

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