On a recent day at Washington's Northeast Ford, 20 customers bought cars but 17 of the deals fell through because the customers could not get financing.

"It's a horror story," said Joseph Gerard, the firm's general manager.

Responding to soaring interest rates and other federal credit-tightening policies, lenders have shortened the terms of car loans, raised interest rates and down payments, and subjected would-be borrowers to such severe scrutiny that many can no longer qualify.

Gerard estimates that he is losing 50 to 100 sales a month now because potential buyers who would have obtained financing six months ago can no longer do so.

If a credit check on a potential car buyer shows that he missed just one monthly payment on a credit card payment somewhere, that could disqualify him for a loan from Ford Motor Credit Co., which finances many of Northeast's customers, according to salesmen.

Without help from Ford's own credit company, customers must turn to outside banks and savings and loans institutions, many of which are cutting off car loans entirely or making the requirements so stiff that few can qualify.

Tight credit combined with interest rates that have soared from the 10 percent range to 15 percent and above during the past year, and the higher-than-ever price tags that cars now carry are sending shock waves through the automobile sales industry in Washington and nationally.

Some dealerships here have seen sales fall off as much as 50 percent during the past few months, and the National Automobile Dealers Association reports that hundreds of dealerships have closed around the nation.

In late March, sales of American-made cars sagged to a low point, off 27.8 percent from a similar period a year ago. Sales of imported cars have dropped only 10.9 percent, and the smaller imports are selling like hot-cakes at many Washington dealerships even in the midst of the general downturn in auto sales here.

The picture is not totally bleak. "A guy with good credit today could still buy a car, but he's spending a lot more for (it)," Gerard said. As for those with marginal or "middle-of-the-road" credit, they can forget it, he said.

Dealers whose trade has centered on big cars are in the worst trouble. At Whalen Lincoln-Mercury in Bethesda, the owners are thinking of closing their doors in the face of a 50 percent decline in sales during the past few months.

"We're making some strong, hard decisions," said William Whalen, the firm's vice president. "Do you just throw more money in the sewer? . . . I'm convinced that this situation is not going to clear up (soon)."

Whalen said that Maryland banks are making few car loans because they must buy their money at over 20 percent interest in many instances, but are limited by Maryland law to charging 15.98 percent on car loans.

The Maryland legislature recently raised the rate to 18 percent, but the new rate is not yet in effect. The limit on car loans in the District is 14 percent, Northeast's Gerard said, making lenders -- like Ford Credit and banks -- even more reluctant to lend money. In Virginia, dealers say that the 24 percent legal cap on auto loans has not yet posed special problems.

Whalen said many dealers in the Washington area are in "a terrible cash-flow situation" because they are paying thousands of dollars to carry their inventories at 20 percent interest rates or higher.

A big $15,000 to $20,000 Lincoln, for example, costs Whalen $300 a month in interest just to keep on the floor to show customers. And selling the big car is no longer a sure thing.

"It's easier to get rid of a common cold," Whalen said.

Whalen also used to make $30,000 a year financing his customers. He would borrow funds at a good rate -- no longer available -- then lend it at a higher rate.

At Northeast Ford, Gerard said he can remember 20 years ago, when he first started selling at the dealership, and when a $75-a-month car payment "seemed astronomical."

Now with a modest car going for $7,500 and up, payments of $250 to $300 a month with the bare minimum down payment at about $1,000 "just seem normal."

A year ago, Northeast Ford's team of salesmen wrote contracts on 375 to $400 cars a month, and about half of those deals were actually consumated after the customers received financing and took possession of their cars.

Today, Gerard said, the salesmen are writing the same number of contracts but only about 100 to 125 of the deals actually become sales. About 50 to 100 customers a month are weeded out by the new tight credit -- customers who in the past could have obtained financing.

"The rejection ratio is the highest ever," said Gerard. "The cars are so darn expensive, incomes haven't gone up to match, and credit is tight. It's been going like this for three or four months."

Gerard is planning to ride through the bad times. Used car sales and service business have not slummed and he has laid off 47 employes, bringing his work force down to 106.

"Last year was a disaster, but we've geared down to it and what was a disaster is not the norm," Gerard said.

From the consumer's point of view, the dealers' hard times can sometimes be translated into good deals.

"I'm considering deals I wouldn't even have looked at two years ago," said George Summers, the sales manager at Logan-Norris Ford in Silver Spring.

Summers said that because so many government credit unions are limiting loans, "The government worker is not buying, he's not even looking."

Jim Stevens, sales manager at Bob Murray's AMI Sales & Service in Kensington, said that sales on Volvos and Subarus are off by 50 percent -- but if he could get a supply of 5-speed, gas-efficient Subarus, he could sell them easily.

"I could use 100 right now, they'd be gone by tomorrow," he said. He said the Japanese manufacturer can't make them fast enough to meet demand, so dealers have received a small monthly allocation of them.

Amid all the horror stories, Anton Motors' general manager Jack Birch said that the Rockville Toyota-Volvo dealer sold a record 173 new Toyotas in March.

"My sales people are all charged up, business for us is extraordinarily good," Birch said.

He said that high interest rates have "slowed a lot of (customers) up," but that his customers have few credit problems because "we're catering to a very good class of people."

But tales like that are the exception rather than the rule in the car business these days. No one knows that better than Jerry Muller, one of the new young salesmen working at Northeast Ford.

When Muller finished junior college three months ago and started selling new cars at Northeast, he had dreams of matching his stepfather's success in the same business.

"He was a salesman and sales manager for 16 years," said young Muller. "He used to roll (sell) 30 or 35 cars a month with no problem. He sent so many people to the bank (for financing) that they gave him his own little desk in there."

But now Muller is discouraged and ready to go back and finish college. Bad times are here, and banks no longer have special little desks for car salesmen.

"I can usually sell one or two cars a day and maybe one or two a week will get financed," he said ruefully.