Friday, July 25, 2008

auto loans

In the waning days of the housing-market bubble, lenders lowered their standards, and that made the downturn worse. There is growing evidence that standards also came down for car loans, and rapidly rising default rates could be the next dilemma for the staggering financial sector.

The amount of auto loans that were past-due or written off as a loss moved sharply higher in the last part of 2007, according to analysts.

2.06% of prime auto loans made in 2006 were more than 30 days past due in November, according to a Standard & Poor's Corp. survey. That past-due number for loans in their first year exceeds the historical high rate recorded in 2001 -- and it is well up from the 1.75% for prime auto loans made in 2005, S&P says.

The past-due numbers for loans made in 2007 are even worse than the 2006 credits -- a trend that exists for both prime and subprime loans, according to S&P.

1 comment:

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