(February 7, 2009) Buying cars on time has been the rule for so long, it's difficult to recall that there was a time when nearly everyone paid cash. Granted, that time reaches back before the Great Depression. In those days, working-class and even middle-class people who could not come up with cash for a car typically had to postpone such a purchase until it could be paid for in full. Only the affluent were able to secure credit: the very people who needed it least.

Looks like that's happening again, though in a less class-conscious manner. Despite the monumental cultural shifts that have occurred over the past 80 or 90 years, the financial crisis that developed during 2008 has the unfortunate side-effect of killing credit for those who really need it. Those who don't - the folks who are able to make big down payments and have pristine credit histories - are the only ones welcomed into the installment-payment fold.

Subprime loans for both homes and vehicles - issued to people whose credit records and down-payment capabilities fell short of the usual standard - are a dominant element of the cause for our current financial mess. Far too many people, whether on their own or prodded by avaricious sellers, wound up signing on the dotted ling for a house and/or car they couldn't really afford. Those of us who support the notion that people should not buy what they cannot afford were horrified throughout the subprime-promotion era.

No one should have been surprised when a lot of those credit-troubled folks began to miss payments, soon facing repossessions and foreclosures. As job losses began to grow in late 2008 and into 2009, the crisis escalated into economic tragedy. Unemployment reached 7.6 percent in January 2009 (up from 7.2 percent), according to the Bureau of Labor Statistics (BLS). January job cuts alone reached 598,000, a monthly figure unseen since 1974. People without a job aren't about to buy automobiles.

Lenders have responded to the crisis by cutting back on loans, just at the time when they were needed most. When banks and other institutions got their billions of dollars in federal bailout money, in the closing days of the Bush Administration, they were expected to start issuing more loans to people who were ready to buy. Instead, they tightened the restrictions even more, making loans available only to a tiny fraction of the shoppers who were prepared to a buy an automobile.

As reported by Automotive News, Mike Jackson, the president of AutoNation (a major dealer group), clarified the situation faced by dealers who are trying to maintain some sales equilibrium. Speaking at the Automotive News World Congress in Detroit, Jackson noted that this past December, GMAC, which makes loans for General Motors vehicles, accepted just nine applications from AutoNation dealerships, versus 1,527 in December 2007. Chrysler accepted only 22 in December, versus 823 in the previous time frame.

Dealers, therefore, have had to send imperfect loan applicants to other types of lenders, whose standards might not be quite so rigid. At those institutions, if they're accepted at all, prospective buyers can expect to be charged a higher interest rate, as well as come up with a heftier down payment. Worse yet, a substantial number of shoppers aren't getting credit anywhere, which means they reduce their expectations - settling for a low-priced used car - or forget the whole thing, at least for now.

New-car sales figures in recent months tell the full sad story, which looks bad for everyone: manufacturers, dealers, shoppers, and the federal government that recently provided bailout money for the Detroit automakers. GM sales fell by 49 percent in January, compared to the prior year; Ford dropped by 40 percent; and Chrysler sank a whopping _ 55 percent. Most import-brand manufacturers suffered a meager January as well, led by Toyota's 32-percent drop.

Whether President Obama's proposed Stimulus Package will make a substantial difference in sales of cars or anything else is the big question. As of February 7, it was uncertain whether the Stimulus would be passed at all, having faced intense opposition by Republicans in Congress as well as by a number of Democrats.

Even less certain is the fate of the banks and lending institutions, who will almost certainly be back in Washington before long, pleading for additional hundreds of billions. Considering the minuscule tangible impact of the first bailout round, dealers in automobiles and other merchandise aren't likely to hold their breaths waiting for customers with newly available credit this time, either.

Everyone knows that the entire American economy rests on readily available credit. Excessively "easy" credit, on the other hand, helped get us into this nasty fix, which, most economists insist, will take years to remedy. Meanwhile, even if credit eases a bit, thoughtful car-shoppers are likely to keep scaling back on their next purchases, or skipping them entirely, fearing what the coming months will bring. If the automakers or anyone else involved has a workable solution, they've not yet been heard from.