Auto-Loan Delinquencies Rise as Stress Spreads

Lenders are tightening credit, raising rates as delinquencies rise
By Jim O'Neill,  Newser User
Posted Dec 6, 2007 6:36 AM CST
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)
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(Newser) – 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.