Perhaps dealers aren’t expecting an immediate lift from the Federal Reserve lowering interest rates for the third time this year.

But overall credit availability already appears to be as good as it’s been in about three years.

Cox Automotive reported two days before policymakers revealed their rate decision that the Dealertrack Credit Availability Index reached its highest point of the year in November, marking the best level since October 2022 as credit access continued to improve.

The index rose to 99.1 in November, which is up 4% from November of last year and 1.1 points from October.

Although some key metrics varied, Cox Automotive senior manager of economic and industry insights Jonathan Gregory explained in an analysis that this movement continues the broader trend of easing credit conditions that began in late summer.

“Overall, the November Dealertrack Credit Availability Index continued to reflect a loosening of auto credit conditions,” Gregory wrote. “The improvement was driven primarily by more favorable pricing, driven by lower yield spreads and higher approval rates. However, lenders showed increased caution toward risk, pulling back on subprime lending and longer-term loans while requiring higher down payments.”

Cox Automotive indicated the average down payment percentage increased by 10 basis points from October to November. But Gregory pointed out that the newest reading still landed 100 basis points below a year ago.

“This may reflect consumers opting for larger down payments to secure lower monthly payments, or a shift in lender requirements,” Gregory wrote.

Perhaps that down-payment level swayed lenders’ underwriting departments last month. Cox Automotive said the approval rate rose to 73.6% in November. That’s up 1.6 percentage points from October and 100 basis points from November of last year.

Gregory noted the approval-rate improvements stopped a streak of two straight months of declines.

While up 200 basis points year-over-year, Cox Automotive determined the share of loans to subprime borrowers in November decreased by 80 basis points month-over-month, sliding from 15.1% to 14.3%.

“This change suggests lenders are tightening access for higher-risk borrowers as overall credit conditions loosen,” Gregory wrote.

Gregory then gave the data connected to yield spreads.

Cox Automotive computed the November yield spread shrank by 56 basis points (from 7.36 to 6.80), while the average contract rate fell by 53 basis points (from 11% to 10.5%). Gregory then noted the five-year Treasury yield increased by 3 basis points (from 3.65% to 3.68%).

“This spread compression was the primary driver of the overall index improvement, offering consumers more favorable pricing despite lenders’ pullback from riskier borrowers,” Gregory wrote.

Two other overall metrics to mention from the November update.

Cox Automotive noted the share of contracts with terms greater than 72 months decreased by 40 basis points on a sequential basis, but the reading is 330 basis points higher year-over-year.

“This may reflect fewer affordability pressures or less lender flexibility on term length,” Gregory wrote.

And Cox Automotive said the proportion of borrowers with negative equity dropped by 140 basis points month-over-month (from 54.2% to 52.8%). But the November reading landed 110 basis points over versus a year ago.

“This signals a decrease in risk and is among the lowest shares seen this year,” Gregory added.

Gregory wrapped up his analysis with these observations.

“Ongoing improvement in credit access, especially in the all-new and all-used indices, continues to offer financing opportunities. While approval rates increased, the slight rise in down payments and more stringent loan terms may reduce affordability. Consumers should remain mindful of this when evaluating loan offers,” he wrote.

“The performance across lender types reflects a shift in strategic priorities,” he continued. “Finance companies, captives, banks and credit unions all appear to be expanding access but are more cautious about risk. As credit conditions evolve, lenders must balance growth with prudent risk management, especially amid shifting rate environments and consumer behavior.”