Access to credit is tightening — here’s what it means for your next auto loan

Key takeaways

• Access to credit is tightening for all consumers, but particularly for consumers with subprime credit scores of 699 or lower.

• Both new and used vehicle prices remain high, and approvals for subprime borrowers have declined since 2025.

• Pre-tariff inventory is declining, and vehicles manufactured or imported with the Trump administration's tariff policies are expected to send prices higher.

• Subprime borrowers may still be able to buy a car by seeking out used vehicles, exploring banks or credit unions and considering private party purchases.

Auto sales from April and the first part of May saw an uptick from February and March, but they are expected to dip as existing vehicle inventory is depleted and new tariffs affect vehicles arriving on car lots. While experts agree tariffs will increase vehicle prices, no one is sure exactly when these increases will happen — largely because the auto market moves slowly. The true financial impact may not be clear for months to come.

At the same time, auto loan delinquencies have been increasing. According to TransUnion, delinquencies in the fourth quarter of 2024 rose to 1.47%, exceeding a high set in 2009 during the Great Recession. Lenders are responding by becoming more cautious with who they extend auto loans to. Denials are increasing for those with subprime credit, and interest rates are rising for all borrowers except those with excellent credit.

Unless you need a car in the near future, it may make sense to wait or consider leasing. In the meantime, you can focus on building your credit score to ensure you qualify for what is likely to be a tight market.

Average credit score needed for approval continues to climb

The average credit score required for new auto loan approval has also been increasing, according to Experian's State of the Automotive Finance Market. Interest rates for subprime borrowers increased while approvals decreased, leading to a gap in affordable financing.

• Average interest rates by credit score

• Loan distribution by credit score

David Thomas, director of content marketing at CDK Global, says that auto loan access has been "impacted by general credit trends." He notes that credit access — and credit denials — are at their highest points in a decade.