Tightening Credit Access Affects Auto Loans for Subprime Borrowers
Access to credit is becoming more difficult, especially for consumers with subprime credit scores of 699 or lower. This trend has led to a decline in auto loan approvals and rising interest rates since early 2025. Both new and used vehicle prices remain high due to pre-tariff inventory depletion and expected price increases from Trump-era tariff policies, which are likely to further strain affordability. Auto lenders have become more cautious, increasing denials for subprime borrowers while raising interest rates across the board except for those with excellent credit scores. Delinquency rates also rose in late 2024 to levels not seen since the Great Recession. Experts suggest that potential buyers may benefit from waiting or leasing until market conditions stabilize and focus on improving their creditworthiness. The average credit score required for new auto loan approval has increased, with subprime borrowers facing a growing gap in affordable financing options. Longer-term loans have become more common as consumers attempt to manage high prices, but these are associated with higher delinquency risks.
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Topics: auto loans credit access delinquencies tariffs vehicle prices