According to a Reuters report, finance companies will ask the U.S. Treasury Department for authority to sell bad auto loans to the government as part of the massive measures currently underway to shore up the credit market.

Bill Himpler, executive vice president of the American Finances Service Association said, "The onus is now on us to make the case for our companies to be able to sell non-mortgage related assets to the government."

The finance companies represented by the group include Ford Motor Credit Co. and GMAC LLC, which is under the control of Cerberus Capital management, the company that controls Chrysler. The GM stack in GMAC is 49 percent.

The $700 billion "bail out" includes the power on the part of the Treasury to buy up bad car loans if the department deems the move a critical one in restoring economic health.

Although historically car loans perform well, the credit market in the U.S. has suffered such a degree of turmoil that the number of defaults are rising. Himpler said, "We're in the process of putting together our case ... that auto paper is key to financial market stability."

Additionally, the association plans to seek an expansion of short-term loan eligibility from the U.S. Federal Reserve for auto financing companies.