It’s tougher to get a car loan these days, even for borrowers who have an excellent credit score, reports Newsday (“More Consumers Rejected for Car Loans,” Sept. 25, 2008).

In the ongoing credit crisis, “prime” borrowers — those consumers who have a credit score of 720 or higher (on a scale of 300 to 850), a score that just a year ago would have easily qualified them for most loans and lines of credit — are increasingly being denied for car loans.

Nationwide, as of Sept. 20, fewer than two-thirds of buyers who have applied for a car loan this year have been approved, a drop of almost 20 percent compared to a year ago, when more than four in every five car loans were being approved, according to CNW Marketing Research of Bandon, Ore.

Consumers who have poor or “subprime” credit — generally characterized by a credit score of 630 or lower — are having an even tougher time getting a car loan. Barely one in five subprime car loan applications have been approved so far this year, compared to more than two-thirds at this same time last year.

“It is a perfect storm for consumer credit,” said Mark Calisi, an auto dealer in Riverhead, Ore. “Years ago, as long as long as you had good credit, you were in good shape. That’s not the case any more.”

Interest rates on some loans are rising, Calisi noted, buyers are getting approved for smaller loan amounts than they applied for, and many borrowers are being asked to come up with larger down payments for their vehicles.

With consumer lending having become an increasingly risky proposition in the current economy, as a growing number of cash-strapped borrowers default on mortgages, credit cards, student loans, and other financial obligations, many lenders are more closely scrutinizing a potential borrower’s total debt load, said Steward Garfinkel, business manager at Security Dodge Chrysler Gem in Amityville, N.Y.

“They’re looking not at how and whether you pay your bills, but how you’re using your credit in general,” Garfinkel explained. Maxed-out and nearly maxed-out credit cards, for example, are seen as a red flag, he said, “even if you never missed a payment.”

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