While people in Washington look for a fix to the economic crisis, Southland car dealers are feeling its effects. KPCC's Brian Watt made the rounds in West Los Angeles.
Brian Watt: Used cars are big business along a stretch of Lincoln Boulevard in Marina Del Rey. But on the last day of a tough month, the lots were kinda quiet.
Rassi Rastegari: Quiet, and every day getting worse.
Watt: That's Rassi Rastegari. He just likes to be called "Rassi." He owns the 2000 Car Collection. Used Saabs, BMW's, Audis, SUV's, and convertibles sit idle on his lot. When times were good, he sold about 15 a month. Lately it's been one or two. He offers a simple explanation:
Rastegari: The banks, right now, they're very tough. They're very hard to get a loan from them.
Watt: So customers who need cars can't borrow the money to pay for them. Banks and other lenders are being picky, Rassi says. The same customer who got 6 to 8 percent interest on a loan before might be faced with 15 to 17 percent now.
It's even higher if the customer has a few dings on her credit history. If lenders say they're experiencing a crisis of confidence, or they just want to protect themselves, Rassi believes that's because they're just trying to get all the money they can.
Rastegari: If somebody doesn't have the really good credit, but they have a job and they are willing to pay monthly payments, there is no reason to charge them high interest, because they're taking advantage of them. And a lot of these people, they are middle class people, they are working people. They need a transportation. So it's a very difficult time.
Watt: The picture isn't much better for someone shopping for a new car. Todd Leutheuser heads the Southland Motor Car Dealers Association. He's heard from members that a lot of buyers are defaulting on loans for cars they bought two or three years ago. So lenders are getting stingy. Leutheuser says the dealers have their own credit issues to resolve.
Todd Leutheuser: The flooring is drying up, and what the flooring is, is the cost of borrowing the money from the bank or from the manufacturer to have that inventory sit on your dealership showroom.
Watt: He says a medium-sized dealership might have $5 million of inventory on its floor.
Leutheuser. And if the manufacturers call that credit, saying, OK, "time for you to pay me the inventory for it," and you can't find the financing from the banks, dealerships close.
Watt: Leutheuser pointed out the recent numbers for new vehicle registrations in Los Angeles County on the association's Web site. They're down by almost a third for August from the same month last year.