"It is to a certain degree a sign that people are stretching," said Fritz Elmendorf, vice president of communications for the Consumer Bankers Association. "It does raise the question of whether people are buying more car than they can afford and should they put the brakes on their car-buying behavior."

This trend is troubling because stretched-out auto loans have led to another milestone, an increase in the percentage of vehicle owners who are "upside down." That’s a term to mean your loan balance is higher than the value of your car. With a longer-term loan, the value of the car declines faster than the loan balance.

That certainly is not a good position to be in if you want to trade or privately sell your vehicle. Oh, and you better pray you don’t get into an auto accident and the car is totaled. If it is, you won’t get enough of an insurance payment to pay off the loan.

In 2001, 25 percent of trades were upside down, according to retail transaction data from the Power Information Network, a division of the marketing research firm JD Power and Associates. In 2005, 33.5 percent of car buyers owed more on their trades than the vehicles were worth.

While consumers may prefer longer loan terms, the CBA survey showed that the lowest auto loan rates, at about 5.5 percent, were available for terms of four years or less, compared to rates approaching 7 percent for loans longer than five years.

Recent data from Edmunds.com, an online resource for automotive information, showed 33.5 percent of car buyers had a loan term of 72 months. The average loan size was $26,156 with an interest rate of 9.6 percent.

Let’s say you finance a car for $23,500 for 60 months at a 7 percent interest rate. Your monthly payment is $465.33. At the end of that loan you would have paid about $4,420 in interest. Finance that same vehicle for 48 months at 5.5 percent and you will pay about $2,730 in interest. Your monthly payment is higher, $546.53, but you save $1,690 in interest over the life of the loan.

If you need to keep your monthly payment around $465, get a less expensive car. Buy one in the $20,000 range and you can have the monthly payment you want and you won’t have to stretch your payments out for five years. A $20,000 car loan for 48 months at 5.5 percent would get you a monthly payment of $465 and you only pay about $2,326 in interest.

Here’s one gauge of auto affordability. For most people, 12 percent to 15 percent of after-tax monthly income is the maximum you should be paying in a monthly car payment, according to Bankrate.com, which has an easy to use auto-loan calculator on its Web site.

Lois Artz of Petaluma, Calif., is a 70-year-old retired bank employee who wrote a bad check. Simona Pickett, a 35-year-old federal government worker who lives in Middle River, Md., also bounced a check. Pickett wrote a $21.66 check to a local supermarket.

Both consumers were referred to a check restitution program operated by prosecutors in their local areas. They were sent letters telling them they owed fees several times the bounced check. They were informed they would have to take a class intended to teach them financial responsibility. And they were told that if they didn’t pay up and go to class, they would be prosecuted.

A number of state and local prosecutors across the country are using "check diversion" companies to operate their restitution programs in an effort to reduce the number of bounced checks. Check diversion companies are private, for-profit debt collectors that contract with prosecutors to collect returned checks. Prosecutors using check diversion companies argue the programs work by returning millions to merchants and decreasing court cases.

Every consumer ought to be paying attention to this legislation because if it passes, it will erode our consumer rights to be treated fairly when we do make a mistake.

It’s preposterous to amend the Fair Debt Collection Practices Act to grant private, for-profit companies the same immunity given to state and local prosecutors.

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