Downturn hits some with auto loans

WASHINGTON, April 20 (UPI) -- Many U.S. car buyers are finding as the economic crisis worsens they assumed more debt than they can handle when they took out loans in the days of easy credit.

In the last quarter of 2007, delinquencies on car loans hit their highest level in 17 years, The Washington Post reports. About 3 percent of third-party loans -- the great majority of all car loans -- were delinquent.

Edmunds.com predicts 1.6 million cars will be repossessed this year, 10 percent more than last year.

Car loans have fixed rates, so borrowers are not in the same dilemma as homeowners with balloon mortgages. But many overextended borrowers are forced to choose which bills to stay on top of.

Lenient terms until recently also means that many people owe more than the value of their cars. Edmunds.com estimates the number of people "upside-down" on their loans at one-quarter of all borrowers, with the average negative equity up 32 percent since 2002.