The news should be disturbing to both economists and government officials because it is a sign that one of the better barometers of consumer credit is showing signs of deteriorating as the year passes and the economy “recovers.”
It is also not terribly good news for the car companies, either. The Big Three are expecting that they will be able to count on easier access to credit for auto buyers to help sales. Tight lending standards are one of the things that has hurt car sales this year. High delinquency rates are not likely to encourage financial firms to loosen restrictions for car loans.
Auto manufacturers also have to deal with consumers who know that they will have trouble making payments. Behind every delinquent loan are other potential loans that were never made to people who believe that buying a vehicle would stretch their financial resources too much.
The car loan delinquency rate has two victims–banks and car companies. Neither of them can stand much more bad news
Douglas A. McIntyre
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