Industry auto lending practices

4 or 5 years ago, in an effort to bolster sales, the auto industry made it easier for a customer to qualify for a car loan. The standards were relaxed. If you looked at the customers budget, you could understand that this car was costing too large a percentage of his paycheck, but he was allowed to buy it anyway. 2 years later, food, gasoline, rent and everything has gone upin price. The customer isn't keeping up with expenses. He can't afford the $500 plus he is paying per month for the car and insurance payments. He gives the car back to the finance company, and buys a car that he is paying $300 per month on. His credit isn't quite as good as it was, but at least he can pay his rent and still get back and forth to work.

As an auto lender, I look very carefully at every customer who comes to our dealership. I would like to sell a car to every person who walks in, but I know that isn't possible. And besides, I don't want to pushe someone over the edge and cause him to lose everything.