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Thread: GM Ramps Up Risky Subprime Auto Loans

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    GM Ramps Up Risky Subprime Auto Loans

    Did we not just go through this with the housing bubble, now GM is taking a failed approach to raise sales. Here we go again with another GM failure, but please let them fail. No more bailout, bankruptcy, broke, out of business. Period.


    President Obama has touted General Motors (GM) as a successful example of his administration's policies. Yet GM's recovery is built, at least in part, on the increasing use of subprime loans.

    The Obama administration in 2009 bailed out GM to the tune of $50 billion as it went into a managed bankruptcy.

    Near the end of 2010, GM acquired a new captive lending arm, subprime specialist AmeriCredit. Renamed GM Financial, it has played a significant role in GM's growth .

    The automaker is relying increasingly on subprime loans, 10-Q financial reports shows.

    Potential borrowers of car loans are rated on FICO scores that range from 300 to 850. Anything under 660 is generally deemed subprime.

    GM Ramps Up Risky Subprime Auto Loans To Drive Sales; Taxpayers Still Own 26.5% - Investors.com
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    Re: GM Ramps Up Risky Subprime Auto Loans

    brings back an old memory, from the mid 60's.....a fellow Navy Reserve sailor, an E2 like me at the time, says he had enough money saved for a down payment on a corvette. I asked him how he was going to make the payments. He said he wasn't planning on making the payments, and he had plenty of places to hide the car in case the Repo truck came around....
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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Born Free View Post
    Did we not just go through this with the housing bubble, now GM is taking a failed approach to raise sales. Here we go again with another GM failure, but please let them fail. No more bailout, bankruptcy, broke, out of business. Period.


    President Obama has touted General Motors (GM) as a successful example of his administration's policies. Yet GM's recovery is built, at least in part, on the increasing use of subprime loans.

    The Obama administration in 2009 bailed out GM to the tune of $50 billion as it went into a managed bankruptcy.

    Near the end of 2010, GM acquired a new captive lending arm, subprime specialist AmeriCredit. Renamed GM Financial, it has played a significant role in GM's growth .

    The automaker is relying increasingly on subprime loans, 10-Q financial reports shows.

    Potential borrowers of car loans are rated on FICO scores that range from 300 to 850. Anything under 660 is generally deemed subprime.

    GM Ramps Up Risky Subprime Auto Loans To Drive Sales; Taxpayers Still Own 26.5% - Investors.com
    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.
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    Re: GM Ramps Up Risky Subprime Auto Loans

    There is nothing inherently wrong with subprime loans. Someone may be a higher risk and therefore you charge them a higher rate. This isn't like the realestate market where the value of new cars is suddenly going to fall through the floor.
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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.
    Not to mention the fact that this last bubble made a lot of people go upside down on their mortages combined with boatloads of unemployment creating lots walkouts and bankruptcies.
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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by Born Free View Post
    Did we not just go through this with the housing bubble, now GM is taking a failed approach to raise sales. Here we go again with another GM failure, but please let them fail. No more bailout, bankruptcy, broke, out of business. Period.
    Pretty sure we just went through bailing them out...
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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by AdamT View Post
    There is nothing inherently wrong with subprime loans. Someone may be a higher risk and therefore you charge them a higher rate. This isn't like the realestate market where the value of new cars is suddenly going to fall through the floor.
    I'm not arguing with you, as I believe you are 100% correct...but the practice of charging people who are less able to pay you back MORE has always confused me.
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    Re: GM Ramps Up Risky Subprime Auto Loans

    Quote Originally Posted by AdamT View Post
    There is nothing inherently wrong with subprime loans. Someone may be a higher risk and therefore you charge them a higher rate. This isn't like the realestate market where the value of new cars is suddenly going to fall through the floor.
    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.
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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.
    Let's stop pretending that auto and home loans are in any way comparable.

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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.
    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.
    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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