A weak economy, a credit crunch and a crashing housing market are beginning to cast their troubles out into other markets, and auto loan financers are beginning to feel the pain. As the dollar's buying power weakens, more and more Americans are having trouble stretching their dollars to meet all their costs. Now, like home loans before them, auto loans are beginning to fall into delinquency.

At the Automotive Finance Summit in Las Vegas, auto lender Experian Automotive has released a report that says that almost $25 billion in auto loans are now past due. From the second quarter of 2007 to the second quarter of 2008, auto lenders saw the number of loans 30 days past due jump 9% and the number of loans 60 days past due jump by 11%. Worse, the number of borrowers with open loans who have "prime credit" has dropped from 61% to 57% over the past two years, reflecting people's increasing struggle to meet their financial obligations.

Despite these troubles, Experian estimates that less than 4% of all auto loans are 30 or 60 days past due. During the second quarter of 2008, there are more than 64 million outstanding auto loans in the U.S. worth about $795 billion. Loans taken out during that quarter were down though, with only 4.4 million taken out in 2008 compared with 5.1 million taken out in 2007. The number of loans taken from automaker-affiliated finanace companies has also dropped nearly 5% over the past two years, though at 31%, they are still the largest source of automotive loans.

More worrisome than the delinquent loans, though, are the drop in people's credit ratings and the drop in the number of loans being approved. Should current trends continue, both automakers and money lenders could be in even more serious trouble.

Sources:-http://wot.motortrend.com