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Thread: GM Ramps Up Risky Subprime Auto Loans

  1. #21
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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by MaggieD View Post
    Good for you, Superfly!!!!!!
    Thanks, hon. It was a long, hard, expensive road, let me tell you, but worth it.

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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Hare View Post
    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: 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.
    "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."
    Interesting, subprime loans are a very good risk, says the GM spokesman. Lets work this out, subprime = a very good risk. Now they are not subprime or they are not a very good risk. Which is it.
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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Born Free View Post
    Interesting, subprime loans are a very good risk, says the GM spokesman. Lets work this out, subprime = a very good risk. Now they are not subprime or they are not a very good risk. Which is it.
    The two are hardly mutually exclusive, for one payments are most often quite reasonable, especially given the fact that most loans are predicated upon the individual in question having a stable employment situation with long term viability. Also, the consequence of default in the auto realm is far less than that of similar industries for a variety of reasons which have already been mentioned in this very thread. Refinancing is readily available to a large number of individuals struggling to meet the original payment structure, exceedingly reasonable interest rates, and the ability to both repossess and seize the opportunity to recoup whatever losses may have been incurred during said time period make sub prime loans a viable alternative to sitting on one's hands during a prolonged dip in sales.
    Last edited by a351; 07-28-12 at 12:04 PM.

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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by MaggieD View Post
    Good for you, Superfly!!!!!!
    _________________________

    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.
    Great story.

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    Re: GM Ramps Up Risky Subprime Auto Loans

    Of course. Why not? They're Government Motors now, they'll be bailed out if these loans don't work out, so why not take risks when the only consequence can be reward, never getting burned?


    Ugh.

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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Born Free View Post
    Interesting, subprime loans are a very good risk, says the GM spokesman. Lets work this out, subprime = a very good risk. Now they are not subprime or they are not a very good risk. Which is it.
    You have to consider the risk AND the reward. GM is no doubt getting a higher interest rate as a result of the lower credit ratings. Payday loan joints make short-term loans to the riskiest folks imagineable ... and they make boat loads of money because they charge so much for the service.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

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    Re: GM Ramps Up Risky Subprime Auto Loans


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    Re: GM Ramps Up Risky Subprime Auto Loans

    Many factors led to the real estate crash and all subprime loans are not created equal. A properly underwritten subprime loan is just as sensible as a properly underwritten standard loan. The problem in the real estate crisis was that lenders stopped applying sound underwriting principles. They didn't really care if the mortgages went bad because they were dicing them up and getting them off their books as fast as they could write them.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by MaggieD View Post
    I have mixed feelings about this. A score of 600, as an example, isn't terrible/awful/never-gunna-pay-ya-back-bad. So I wonder how low they go. I understand that some lenders install kill switches in their cars and if a payment's a certain amount late late, they will activate the switch by satellite and the car's a no-go.

    People need cars. Once people get too far into a hole, they can never climb out. While I have no sympathy for serial defaulters, it would seem that people need second chances at least as much as the banks loaning to them.

    So, in short, I think there's more to the story.
    I am not a serial defaulter. My ethics tell me to pay my bills, which I do. However, I did have an incident with Bank of America a while back. They raised my interest rate from 12.9 to 29.9. No problem yet. They have the right to charge whatever they want, and I have the right to choose whether or not to accept that rate. However, what the douche bags also did was to apply that 29.9 rate on everything that I had already charged when it was still 12.9. They also increased my monthly payment. That was pure, unadulterated theft on the part of Bank of America. I made calls and they pretty much told me tough ****. That's when I decided they were right, and defaulted on the payments I owed. When they called me, I pretty much told them the same thing they told me earlier..... tough ****. As a result, my credit is ruined, but I knew that would happen when I made my decision to screw them back and screw them harder than they screwed me. It's OK. I paid off everything else, and even after the 7 years goes by, and I can get credit again, I will not do it. I don't need them. In fact, Bank of America and your other banksters need us more than we need them. This whole episode taught me a lesson that I had not learned before in my entire 60+ years of existence on this planet. You can do quite well without the banksters. Just be prudent in your own spending, and if something costs a lot of money, just save up for it. There is no reason in the world to become a slave to the greed of banksters, and be victimized as a result. In 3 more months, I will have the last of my debt paid off (my car), and at that time I will be able to say that I am my own man, and I owe nobody anything. It is going to stay that way too. **** the banks.
    Last edited by danarhea; 07-28-12 at 03:33 PM.
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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by AdamT View Post
    You have to consider the risk AND the reward. GM is no doubt getting a higher interest rate as a result of the lower credit ratings. Payday loan joints make short-term loans to the riskiest folks imagineable ... and they make boat loads of money because they charge so much for the service.
    I recall you mentioned that Europe should not be imposing austerity measures but instead keep pumping money into the economy. In order to do that they have to borrow. Now take Spain paying over 7% in interest. Nobody will lend to Greece no matter what the interest rate is. So yes GM is getting a higher interest rate due to the added risk, the problem is GM is doing this to boost sales thus the underwriting standards you speak of may very well be absent. Meaning sales come first over quality buyers with good credit, so they have lowered their standard to who knows what. In the real estate market you did not have to have a job, credit or money to get a loan. I'm not suggesting GM is doing that bad, but when you have sales as a priority and you use loose credit to achieve those sale, you are desperate and on the brink. That also means all else has failed to boost sales for GM so they resort to the most risky of attempts to get sales up.

    Further look at GM's stock price, it was right at $40 a share in January 2011, today it's at $19, half of where it was 17 months ago. This confirms to me GM is desperate for sales and are now loaning to anybody and everybody to get sales up at the risk of their lending arm.

    By the way do you ever think we'll get our money ever paid back from GM? We do own I think like 26% of GM, which is now worth half of what it was 17 months ago.
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