Car Jam? Capital One Loan Customers Draw Scrutiny

Capital One (COF Quote), the go-go consumer lender, is maddeningly vague about where its eye-popping growth is coming from. But if rivals are to be believed, a good chunk of it is being generated by making car loans at aggressive terms to borrowers with tainted credit histories.

The Falls Church, Va.-based lender has long posted gaudy growth rates in its credit card portfolio. But over the past year, it has substantially increased the amount of auto loans it makes, concentrating on people with iffy credit.

If, as alleged, the terms of Capital One's car loans are too burdensome for shaky borrowers, these debtors could default and push up bad-loan-related loss rates. This would be something of an upset, because investors have credited Capital One with careful lending policies. ...