Auto Loans Feeling the Squeeze

With the mortgage market suffering the way it has been, it was only a matter of time before experts started seeing the same trend in auto loans. The economy has been feeling the pinch of subprime loans for a long time now, and auto loans are just the latest casualty.

Experts say that U.S. banks are now reporting heavy losses in the default areas of car loans, home equity loans, and credit cards. They have raised reserves for their loan losses by more than $6 billion.

Experts say that what started out as merely a “subprime problem,” is now growing more and more to other areas. Instead of just the mortgage companies getting concerned over the current trends, now car loans, etc. are wondering what the future will hold for them. Those holding car loans that may have extended payment terms for lower monthly payments so as to sell the car, may now be looking at those groups of people not paying their auto loans back.

Experts say that not only are there problems with auto loans, but the issues are growing at a much faster pace than those of the mortgage industry, letting them know that they could be in some serious trouble. The newspapers are already reporting that the auto loan industry is gearing up for problems with defaults on their loans, as they have already started seeing the trend going that way.



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