Camden said he usually can work with car buyers to get them some type of financing, but GMAC and other lenders have ended loans previously offered for up to 140 percent of the value of the vehicle sold.
"Probably 80 percent of the people trading vehicles owe more than the current vehicle is worth and if they don't have a lot of money down then they have got to finance that negative equity into a new loan," he said. "Lenders, in order to keep making loans, have inched it up over the years to a pretty high number, and they've now cut that back."
CNW Marketing Research, an automotive research company in Bandon, Ore., estimates that through Sept. 20, the share of subprime borrowers approved for automobile loans plunged from 67 percent last year to under 23 percent this year.
Car dealers who specialize in serving credit-challenged customers said they are seeing wealthier buyers come to their lots for cars since lease programs and conventional auto financing have been restricted.
"We're definitely seeing better qualified buyers than in the past, but our sales are still off from a year ago," said Chris Pendergrass, president of the Cleveland, Tenn.-based Buy Here, Pay Here USA. "People are more reluctant to buy right now."
Similarly, Check Into Cash, one of the nation's biggest payday lenders, is doing less business than a year ago because of consumer anxiety and job losses, according to Check Into Cash founder and President W. Allan Jones.
"Our customers don't feel good about overspending, and if they don't feel good about the economy they don't borrow as much," he said.
crunch at home
R. Craig Holley, chief executive of CapitalMark Bank in Chattanooga, said the biggest changes have come for homebuyers who now must put down bigger down payments and have better credit histories than in the past. But all loans are getting more scrutiny and rates on many loans have increased in recent weeks.
"Underwriting standards for a residential mortgage loans have definitely tightened," he said. "The overall cost of credit for both consumers and businesses has increased ... but we still have plenty of money to lend."
Last week, many down-payment assistance programs that previously provided funds for homebuyers to purchase a home with no money down were stopped. Congress ended such practices as part of a housing measure adopted in July to stem home foreclosures and shore up the housing market. As part of the plan, the down payment on government-backed loans also will be increased in January.
Keith Sanford, senior vice president at First Tennessee Bank, said conventional mortgage lenders also are demanding bigger down payments and better credit records.
"If you go back three or more years, just about anybody could get a mortgage loan," he said. "Now, in most cases, we're requiring 10 percent down and even government-backed loans are requiring 3.5 percent down.
