Auto-Loan Delinquencies Rise as Stress Spreads

Lenders are tightening credit, raising rates as delinquencies rise
By Jim O'Neill,  Newser Staff
Posted Dec 6, 2007 6:36 AM CST
Auto-Loan Delinquencies Rise as Stress Spreads
Special prices are placed on the windshields of a long row of unsold 2007 Ford Freestyles outside a Ford dealership in the west Denver suburb of Lakewood, Colo., Sunday, Nov. 18, 2007.   (Associated Press)

Consumer auto loans are beginning to show the strain of the subprime collapse, with delinquencies among top-rated borrowers from 2006 rising 55%, to 4.5%, in September. That's the largest month-to-month increase in delinquencies in nearly a decade, the Wall Street Journal reports. Delinquencies among less credit-worthy consumers rose to 12%, the highest level since 2002. Said one analyst, “the numbers will get worse.”

Roughly $575 billion in auto loans are made annually. Borrowers were at least 30 days behind on 2.77% of nonbank auto loans in the second quarter, the worst rate since 1991, and a concern to the struggling auto industry. If lenders continue to tighten credit and raise rates, fewer cars will sell in a year already looking grim. (More auto loans stories.)

Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.