DETROIT, Feb. 4 (UPI) -- U.S. banking executives are worried the credit crunch and a possible recession will decrease auto sales for 2008, the Detroit News reported Monday.
On the verge of a bear market on Wall Street, lenders of car loans are reporting a rise in defaults, causing industry analysts to predict a drop in sales, the report said.
Lenders are tightening their standards, as both prime and the riskier subprime automobile loans are both reporting an increase in defaults.
The American Bankers Association reported delinquency rates for indirect loans -- those arranged by auto dealers -- rose to a 16-year high in the third quarter of 2007, up 2.86 percent.
"The trend raises the yellow caution flag," said ABA's chief economist James Chesson.
Delinquencies for auto loans made to prime borrowers have also increased. Of the auto loans made in 2006 to prime borrowers, rated by Standard & Poor's, 2.09 percent were more than 30 days past due, up from 1.85 percent of the prime rated loans past due of 2005.
"We're seeing customers across all tiers having some struggles," said Kerry Rivera, a spokeswoman for Toyota Financial Services.
