Car Loans Tighten as Debtors Miss Payments

If you're thinking about buying a new car, start saving your pennies because it's becoming tougher to get a loan.

Author:: Joe Mont
Publish date:: Sep 11, 2009 8:09 AM EDT

COSTA MESA, Calif. (

) -- If you're thinking about buying a new car, start saving your pennies because it's becoming tougher to get a loan.

Experian, the Costa Mesa, Calif.-based credit-reporting company, says the number of auto loans at least 60 days past due has risen by 21%, putting more than $25.5 billion in loans at risk, including 30-day delinquencies. In the second quarter, 0.8% of all automotive loans were 60 days past due, compared with 0.66% for the same period in 2008. Thirty-day delinquencies rose by almost 15% in the second quarter.

The stats were part of Experian's quarterly

State of the Auto Finance Market

report, released on Sept. 9. The company, which also provides data to carmakers, dealers and insurers, compared the first half of 2009 with the first half of 2008. While some of the results were grim, there were signs of stabilization.

"The increase on 30-day delinquency amounts to $20.3 billion in outstanding loans, with banks shouldering most of the debt," the report reads. "Banks continued to experience the sharpest rise in delinquency, with an increase of more than 30%."

Only three states saw a year-over-year reduction in 30-day delinquencies: Alaska (15%), Nebraska (3%) and Michigan (2%). The states with the largest percentage increases were Idaho (61%), Montana (38%), Hawaii (32%), Washington (28%) and Utah (27%).

Experian says rising delinquency rates have caused lenders to tighten criteria, pushing some consumers out of the new-vehicle market. However, the bad news for new-car shoppers is good news for those selling used vehicles.

Market conditions forced more shoppers to consider used-car financing, which rose 5% during the first half of 2009 compared with a year earlier. This shift was a boon for independent used-car retailers, which saw their share of the financing market expand by more than 7%.

In other areas, the change is fairly minimal. The average duration of new loans for new vehicles fell by one month to 62 during the first half of 2009, compared with a year earlier. The average loan amount rose by $105 to $24,265 during the same period. The average monthly payment for new car loans dropped by $5 to $453 this year.

The changes might seem minimal, but Experian sees them as a positive indicator.

"Consumers were financing larger amounts for new vehicles, which could be a sign that overall consumer confidence is starting to rebound," says Melinda Zabritski, director of automotive credit for Experian. "If new-vehicle loan amounts continue to see increases into the third quarter, it will be a very positive sign for the auto industry."

The news is mixed for the companies providing car loans.

Large banks showed healthy growth.

JPMorgan Chase's

(JPM) - Get Report

auto financing unit led the market with a 6.7% share, up nearly 14% from last year. Wachovia Dealer Services, now part of

Wells Fargo

(WFC) - Get Report

, saw its market share increase 17%, to 4.7%.

The lenders that work exclusively with

Ford

(F) - Get Report

General Motors