The crisis in the financial markets could make it even tougher to get loans to buy cars or houses, and the Federal Reserve didn't make things any easier by declining to lower interest rates this week.
Experts say that any hope of relief from the ongoing credit crunch -- which had started to flicker as rates slipped and home buyers eased back into the market -- has been dashed by the week's events.
With the big financial houses in disarray, the market for home mortgages and other loans is shakier than ever.
A rate cut by the Fed might have eased the problem by making it easier for businesses and individuals to get access to cash, but the decision to leave rates unchanged means that the mortgage market will not gain the extra flexibility that many had hoped for.
The lending environment for home and car loans as well as credit card rates "definitely won't get better in the short term and may get a little worse," said Greg McBride, senior financial analyst for the personal finance website Bankrate.com.
It could prove difficult to extricate the economy from what may be a vicious circle: The housing crisis spurred the Wall Street crisis -- but neither may be able to recover without the other.
"It's one of those chicken-and-egg things," said UCLA economic forecaster Edward Leamer.
The continued turmoil also means that consumers will continue to have difficulty affording -- or financing -- other large purchases, such as automobiles.
Whereas interest rates on cars loans, credit cards and some home mortgages are actually down from a year ago, lending standards have grown so tight that only people with the highest credit scores can get the loans. In some cases, even they have been turned down.
The difficulty faced by even qualified buyers could make already dismal auto sales worse, said Bert Boeckmann, owner of Galpin Motors in North Hills.
"It doesn't matter what the rate is if the customer can't get the loan," he said.
Sales at his dealerships, which include Ford, Mazda, Honda and Jaguar franchises, were down about 10% in August from a year ago, Boeckmann said. Nationwide, automobile sales were down 15.5% in August from the previous year.
Government and industry leaders have blamed the Wall Street meltdown on the housing crash, and they say the housing market needs to stabilize to stop the bleeding in the financial markets and the overall economy.
