Graph based calculator printed with the word Auto credit expanded for a second continuous month in October, but the news isn’t all good for borrowers.

The Dealertrack Credit Availability Index, a product of Kelley Blue Book parent Cox Automotive, tracks how hard it is to qualify for all types of auto loans. The index rose 0.2% in October, which means getting auto credit was a little easier than it was in September.

Access to credit at all types of lenders was eased in October. Banks have loosened the most, while auto-focused finance companies have loosened less. Lenders also created more subprime loans than in September.

But more applicants were rejected. The approval rate has fallen to its lowest level since 2020, and the share of long-term loans has also shrunk.

Longer loan terms can give buyers a lower payment, but the result will keep them in debt for an extended period of time. It will also burden them with debts on an older car of less value.

Lenders also requested larger down payments in October compared to the previous month.

The Federal Reserve raised the interest rate at the beginning of November which could shake up the auto credit market. Jonathan Smoke, chief economist at Cox Automotive, warned that repeating the interest rate raises the risk of making new cars something only the wealthy can afford.

Consumers have not yet understood the message. The Conference Board’s Consumer Confidence Index survey shows that the number of Americans planning to buy a new car in the next six months is the highest since July 2020.

But they will need a higher down payment, higher monthly payments, and a stronger credit score to do so.

Morning Consult’s daily index of consumer confidence fell 2.7% in October as both basic measures of current conditions and future expectations weakened. Stock market volatility and mid-term election rhetoric are likely to have an impact on the observed declines.

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