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Thread: GM Ramps Up Risky Subprime Auto Loans

  1. #11
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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Born Free View Post
    Nothing inherently wrong with sub-prime loans you say. Then I guess the housing collapse had nothing to do with sub-prime loans, or the ability to even pay the loan back, causing banks all over the nation to fail. Interesting how you try your spin to make the Ugly Duck look beautiful.
    The collapse of the real estate market is far more complicated than, "Hey! They were making subprime loans!"


    Quote Originally Posted by Born Free View Post
    People need cars, why? Do we not have public transportation? Sub-prime loans, put the housing market upside down. Now GM after going broke once, wants to do it again by giving away cars that won't be paid. And worse yet it's the tax payer who ends up paying for it in the end as we already did once. Maybe your OK with that but I'm not.
    Do you have any idea how difficult life is without an automobile? Mom goes to work in one direction; dad in another; kids need to be dropped off at the sitter; groceries need to be toted home; doctor appointments; et al. Public transportation (even if it is available, is a poor substitute for one's own car. You seem to think everyone has a bus stop within walking distance of their home. They don't.

    We have no evidence that GM is "giving away cars that won't be paid." Subprime lending, if proper underwriting standards are adhered to, is a very profitable business.
    Last edited by MaggieD; 07-28-12 at 10:41 AM.
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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Hare View Post
    Let's stop pretending that auto and home loans are in any way comparable.
    Your having a hard time with econ 101, when you make a loan to a sub-primer the likelihood of being paid back is sub-par. I don't care what your borrowing money for, a house, or a car, or anything else.
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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Born Free View Post
    Your having a hard time with econ 101, when you make a loan to a sub-primer the likelihood of being paid back is sub-par. I don't care what your borrowing money for, a house, or a car, or anything else.
    But the reward for the salesman/dealrship and the home/car/appliance producer is immediate. The gov't has a vested interest now in "helping" keep this from having any negative consequences as WE THE SHEEPLE are 26% owners of GM, so they (GM) have little REAL risk of losing anything. Yes they can!
    “The reasonable man adapts himself to the world: the unreasonable one persists to adapt the world to himself.
    Therefore all progress depends on the unreasonable man.” ― George Bernard Shaw, Man and Superman

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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Born Free View Post
    People need cars, why?

    Do we not have public transportation?

    Sub-prime loans, put the housing market upside down.

    Now GM after going broke once, wants to do it again by giving away cars that won't be paid. And worse yet it's the tax payer who ends up paying for it in the end as we already did once. Maybe your OK with that but I'm not.
    An answer to a question of such complexity may not be found in our lifetimes.

    Yes, but hardly in large enough capacity to fulfill the needs of the population at large.

    The housing market and the auto market don't operate on the same terms, if a handful of your neighborhood defaults on their mortgages, or fails to properly maintain their place of residence, the loss of value spreads like wildfire, as demonstrated a scant few years ago. No such phenomenon will result from an isolated increase in sub prime auto loans, this is simply apocalyptic crowing aimed at an entity coincidentally linked to the current President.

    Yes, I'm positive that GM is simply itching to undergo another bankruptcy, and further damage their reputation. Your also ignoring the fact that loosening credit standards is a mechanism used to broaden their consumer base to avoid such an occurrence, hardly a unusual practice in the auto industry. If an individual does indeed default on a vehicle, it can also be repossessed and sold for profit in order to recoup a chunk of the aforementioned loss, something depicted in your own source towards the tail end of the article.

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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by MaggieD View Post
    The collapse of the real estate market is far more complicated than, "Hey! They were making subprime loans!"




    Do you have any idea how difficult life is without an automobile? Mom goes to work in one direction; dad in another; kids need to be dropped off at the sitter; groceries need to be toted home; doctor appointments; et al. Public transportation (even if it is available, is a poor substitute for one's own car. You seem to think everyone has a bus stop within walking distance of their home. They don't.

    We have no evidence that GM is "giving away cars that won't be paid." Subprime lending, if proper underwriting standards are adhered to, is a very profitable business.
    The idea that someone needs a car is not the responsibility of GM, or the tax payer.

    "IF" is a big word, proper underwriting standards sure collapsed the housing market.

    The collapse of the real estate market is NOT far more complicated than giving out sub-prime loans. No job, no credit, no money and you got a housing loan, that no one could pay back. Seems pretty simple to me. I can elaborate in more detail, but that is the foundation of the collapse.
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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Hare View Post
    An answer to a question of such complexity may not be found in our lifetimes.

    Yes, but hardly in large enough capacity to fulfill the needs of the population at large.

    The housing market and the auto market don't operate on the same terms, if a handful of your neighborhood defaults on their mortgages, or fails to properly maintain their place of residence, the loss of value spreads like wildfire, as demonstrated a scant few years ago. No such phenomenon will result from an isolated increase in sub prime auto loans, this is simply apocalyptic crowing aimed at an entity coincidentally linked to the current President.

    Yes, I'm positive that GM is simply itching to undergo another bankruptcy, and further damage their reputation. Your also ignoring the fact that loosening credit standards is a mechanism used to broaden their consumer base to avoid such an occurrence, hardly a unusual practice in the auto industry. If an individual does indeed default on a vehicle, it can also be repossessed and sold for profit in order to recoup a chunk of the aforementioned loss, something depicted in your own source towards the tail end of the article.
    All what you said has nothing to do with anything. Sub-prime loans are high risk loans, thus the name "sup-prime". And the likelihood of being paid back is sub-par. GM is making sub-prime loans to boost sales. If making sub-prime loans was so profitable they would have been doing that on day one.
    Liberals - Punish the Successful, Reward the Unsuccessful
    Liberals - Tax, Borrow, Spend, and Give Free Stuff
    Obama's legacy - President Donald Trump

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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Born Free View Post
    The collapse of the real estate market is NOT far more complicated than giving out sub-prime loans. No job, no credit, no money and you got a housing loan, that no one could pay back. Seems pretty simple to me. I can elaborate in more detail, but that is the foundation of the collapse.
    There have always been subprime loans. They're not going away any time soon -- most especially for cars. It is only when mortgage fraud, lack of regulation, rating agency lies, consumer and lender greed entered the picture that home mortgage subprime loans became the easy scapegoat for the real estate collapse. Mortgage fraud was a primary factor in the real estate crisis. Lack of lender regulation was another.

    There is no earthly reason to believe that GM's financial arm (car loans) is structured anywhere near the same way as home loans. In fact, it is completely different. And that's the subject of this thread. GM did not require a bailout because of its automotive subprime lending business. In fact, GMAC was specifically loaned $6 billion so they could continue financing cars -- and subprime has always been a part of that business model.
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Born Free View Post
    All what you said has nothing to do with anything.

    Sub-prime loans are high risk loans, thus the name "sup-prime". And the likelihood of being paid back is sub-par. GM is making sub-prime loans to boost sales.

    If making sub-prime loans was so profitable they would have been doing that on day one.
    Yikes, a complete non response? I would've settled for a personal insult or even a off topic tangent sourced from an opinion piece.

    I think you might just be on to something here, especially when coupled with a quote from your own article:
    "The subprime market grew as a result of the recession," said GM spokesman Jim Cain. "Our experience, however, is that with proper management they are very good risks."
    Simply put, credit standards are typically loosened to broaden said companies consumer base during prolonged periods of lackluster consumer activity, hardly a foreign or amoral concept by any standards.

    This statement has prodded me to use a quote of yours that you happened to invoke erroneously a handful of posts back.

    Quote Originally Posted by Born Free View Post
    Your having a hard time with econ 101
    Last edited by a351; 07-28-12 at 11:21 AM.

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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Hare View Post
    Let's stop pretending that auto and home loans are in any way comparable.
    ^^ This.

    Maggie's already pointed out that kill switches and repo men can solve an delinquent car payment problem really fast. It's not like all the red tape that has to be gone through for a foreclosure. Foreclosures can take months and months, up to years. Cars can be repossessed normally after 30 to 60 days late.

    As someone who went through an awful divorce, and had to spend years rebuilding credit, I know how important it is to be given a chance. I started out going to "buy here, pay here" lots, then moved up to sub-prime finance company loans, and now my credit is good enough that I can get a loan just about anywhere. Had it not been for those subprime loans, though, I wouldn't have been able to.

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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Superfly View Post
    ^^ This.

    Maggie's already pointed out that kill switches and repo men can solve an delinquent car payment problem really fast. It's not like all the red tape that has to be gone through for a foreclosure. Foreclosures can take months and months, up to years. Cars can be repossessed normally after 30 to 60 days late.

    As someone who went through an awful divorce, and had to spend years rebuilding credit, I know how important it is to be given a chance. I started out going to "buy here, pay here" lots, then moved up to sub-prime finance company loans, and now my credit is good enough that I can get a loan just about anywhere. Had it not been for those subprime loans, though, I wouldn't have been able to.
    Good for you, Superfly!!!!!!
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    I'm a Realtor and was asked by my church to interview and select a tenant for the parsonage, as the new pastor had his own home. I ended up selecting a husband/wife who'd just declared bankruptcy the year before. Know why? He was honest. He told me he'd left a great job here in Chicago to pursue what he thought was going to be a better job in the south...with his brother-in-law. That didn't work out as promised, and he ended up in a world of hurt. They lost their home, had a credit score in the 500's. On the surface, he looked like a terrible risk.

    But as he told me his story with tears in his eyes, I just saw a guy who needed a break. I recommended him for the tenancy. The Board of Trustees at the church thought I was nutz. I really went to bat for this guy, and, being a church, they decided, "Well, we asked Maggie to do it, and here's who she brought. Maybe it's for a reason. We ought to listen to her."

    This family never had a late payment. They were tenants for three years and left the house immaculate when they moved out. To buy their own home.

    Everyone needs a second chance.
    Last edited by MaggieD; 07-28-12 at 11:43 AM.
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

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