Car Loan Rejections Shock Buyers With Credit Tightest Since 2020

Americans are having a harder time getting approved for auto loans, as banks worry over the risk of defaults at a time when high interest rates and elevated car prices are squeezing budgets.

With borrowers struggling to make their monthly car payments, banks are responding by tightening credit standards. That’s freezing out buyers with lower credit scores who can’t afford a large down payment, while Americans with healthy finances are having more trouble than usual securing loans.

Access to auto credit is the lowest since August 2020, with the approval rate for loans down 1.6 percentage points year-over-year, according to Cox Automotive. At the same time, the ...