Banks lose their competitive edge when it comes to putting their money on the streets.

Los Angeles banks are watching their car-loan portfolios dwindle as U.S. automakers, looking for ways to spur car sales, are offering rebates and low-interest financing programs that banks can't match.

And they will keep chipping away at banks' car-lending business and gleaning the best credit risks, say banking and car-financing experts.

"Ever since the mid-1970s (Arab oil embargo) and the resulting drop in car sales, the car makers started offering their own financing," said Rian Lidschin, vice president of Los Angeles-based Tokai Bank of California. He has watched trends in auto financing at Tokai and other banks since 1982.

"Even without the manufacturers' rebates and low interest rates (offered by automakers' finance units) the trend away from banks for car loans will continue," Lidschin said.

Echoing that view, Matt Jergens, spokesman for San Francisco-based Wells Fargo Bank, said, "The U.S. automakers are offering rebate programs and loans at below-market rates. We aren't willing to sacrifice the quality of our consumer loan portfolio to match them."

At the end of 1990, banks had a 44.2 percent share of all the personal secured loans made in the U.S. A year later, that had been chipped to 43.8 percent. Consumer credit experts say 85 percent of all consumer loans are made to finance cars.

Over this same period, Big Three U.S. automakers' car sales financed by their own credit subsidiaries ranged from 31 percent at Chrysler Corp. to 37 percent at General Motors Corp.

Collectively, banks, credit unions, finance companies, investment pools and other lenders made $267.81 billion in consumer loans in the U.S. last year, down 6 percent from $284.91 billion in 1990, according to data compiled by the Consumer Bankers Association. Car loans and lease-financing agreements, including those made by the U.S. Big Three's finance units, comprise 85 percent of all personal loans made by all types of lenders, according to CBA data.

The Big Three U.S. car manufacturers and the Big Three Japanese automakers collectively had 70.4 percent of the U.S. auto market last year, off slightly from 71.6 percent in 1990, said Jim Bush, editor of Detroit, Mich.-based Ward's Automotive Reports, an authoritative industry publication.

Since major car makers control more than 70 percent of the U.S. market, their manufacturer-sponsored financing will continue to pare the volume of auto loans made by banks, Bush said.

U.S. car makers are more aggressive than the Japanese in their manufacturer-sponsored financing efforts in 1992. General Motors Acceptance Corp., the financing division of General Motors; Ford Motor Credit, the financing division of Ford Motor Co.; and Chrysler Credit Corp. are all offering rebates and low interest rates.

By contrast, Japanese automakers' credit operations take a more selective stance and accept only the best credit risks, according to car financing experts. Financing officials for Toyota, Nissan and Honda dealers throughout Los Angeles said their finance divisions aren't offering any rebates or low interest rates, although Nissan has had both in the past.

Nationally, the three major U.S. automakers have had varying degrees of success with their manufacturer-sponsored car loans. Of the 4.32 million new vehicles sold or leased by GM in 1991, 35 percent were financed by GMAC. That was a drop from 37 percent in 1990 when GM sold 4.93 million autos, according to Ward's Automotive Reports. But Detroit-based GM public affairs spokeswoman Linda Kosinski said GMAC is more aggressive this year than last.

Some dealerships that sell GM cars are less affected than others by the manufacturer-sponsored financing.

For instance, Cerritos-based Buick Mart mainly sells Buicks and Cadillacs that are priced in the upper end of the U.S.-made car price range. Most of its customers pay cash or make their own financing arrangements with banks or credit unions. Still, said Doug Janco, finance manager for Buick Mart, 25 percent of his dealership's car buyers have taken advantage of GMAC financing and rebate incentives since they were introduced in early February.

Ford Motor Co. sold 2.85 million cars in 1991, a drop from 3.29 million in 1990, according to Ward's Automotive Reports. Ford corporate spokesman Nick Sharky said Ford Motor Credit Co. financed 35 percent of all cars sold by the company's dealers in 1991, an increase from 31 percent in 1990.

Tony Soto, inventory control manager at Los Feliz Ford in Glendale, said Ford Motor Credit financing interest rates run from 2.9 percent to 7.4 percent or buyers can get rebates of up to $2,000. He said the low rates and rebates have helped the dealership increase sales this year.

Chrysler sold 1.51 million autos in 1991 vs. 1.7 million in 1990. In both years, 31 percent of the car sales were financed by Chrysler Credit Corp., said Bob Heath, the unit's director of public relations.

Locally, La Brea Avenue Motors, a Chrysler Plymouth dealership, is out-performing Chrysler's 1991 national average in manufacturer-sponsored car financing.

"During the last year, 85 percent of our new car sales have been financed by Chrysler Leasing Corp.," said Greg Rudy, leasing and sales manager at La Brea Avenue Motors. Rebates of up to $1,000 and low interest rates sponsored by the manufacturer helped the dealership sell more cars in the first quarter of 1992 than a year earlier, he said.

"The car buyer today is smarter than ever before. They want price, quality and the best financing deal possible. Chrysler Credit offers rebates and a wide range of interest rates that run from zero to 9.9 percent. The banks can't touch the dealer financing rates," Rudy said.