US car finance in trouble

Fri, 07 Dec 2007



With the US subprime mortgage lending market in crisis, the car finance market, as reported earlier this month, is showing key cracks opening up.

Recent research indicates that delinquencies in the car finance loan market in America are climbing to their highest level in several years. Lenders of car finance are tightening their criteria, with the current debt outstanding on car finance loans for new and used vehicles around $757 billion, according to figures from the National Automotive Finance Association.

The NAFA is finding increasing levels of delinquencies on auto loans, backed up by a recent Lehman Brothers survey. Experts from the vehicle finance sector indicate that number of defaults on loans will only get worse in the next few months. Despite a monstrous crash remaining unlikely, the impact of the subprime lending crisis is now stretching into the American auto loan market.
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