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Subprime Auto Loans

Will we never learn?:shock:

I guess since GM is now too big to fail, we can have a car bubble, and the taxpayer can pay for auto loans. :roll:

GM Goes Subprime (Some Companies Just Never Learn) | www.bullfax.com

edit: I don't start many threads, and wasn't sure if this is the forum where this one belongs, so if it's in the wrong place, would one of the mods kindly move it?

This isn't new. . . car dealerships have been dealing with subprime loans for years.

My husband and I bought our first truck together. I didn't even *have* credit - his was 400 something. What they do, here, is snipe you with extra high interest rates. . . our payments were over $500.00/month at 11% interest.

But we realigned our credit quickly - a year later we refinanced at a 6% interest rate and haven't missed a payment - we've almost paid the truck off.
 
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Nope, I asked you where was the risk when Government Motors can just go to Congress to bail them out?

Which is moral hazard. What makes you believe they are taking unacceptable risks due to government involvement? If you are going to make such an argument, you are going to have to identify the weakness in their endeavor.
 
Which is moral hazard. What makes you believe they are taking unacceptable risks due to government involvement? If you are going to make such an argument, you are going to have to identify the weakness in their endeavor.

That's not an answer since you're answering a question with a question. I haven't made an argument yet, but when I do I'll let you know. Until then, can you please answer my question?
 
Sure, I agree. Yet you already have a negative bias towards them, which is somewhat understandable. Do you honestly believe gm can grow revenue without increasing risk?

No, but GM losses are now our collective losses.
 
That's not an answer since you're answering a question with a question. I haven't made an argument yet, but when I do I'll let you know. Until then, can you please answer my question?

Read up on moral hazard and reply accordingly.
 
The people you are talking about do not have to purchase a new car. Also the sub prime market as you well know is there is for all sorts of people that want more than they can afford.

Then how do you suggest they get transported around in a way affordable to them?
 
Your question pertained to risk, and there will always be risk in terms of profitability.

That's a logical fallacy since the company can do whatever it wants and not take a risk since the government will bail them out.
 
And what are these losses?

These losses are currently still running in the tens of billions, will have to wait and see how the upcoming IPO plays out and when the government actually gets out of GM.
 
That's a logical fallacy since the company can do whatever it wants and not take a risk since the government will bail them out.

WTF are you talking about? Every firm faces risk in terms of profitability. Your moral hazard (even though you have no idea you made it) comment is on shaky ground being that a plethora of risk is still on the table.

Btw, how on earth is that a logical fallacy?
 
These losses are currently still running in the tens of billions, will have to wait and see how the upcoming IPO plays out and when the government actually gets out of GM.

Might as well provide a source for your comment (for the sake of citation).
 
Then how do you suggest they get transported around in a way affordable to them?

What is wrong with a used car. Those sub prime loans need not come from an auto maker.
 
What is wrong with a used car. Those sub prime loans need not come from an auto maker.

Know why companies give sub-prime loans? They're very profitable. If they weren't, companies wouldn't make them.
 
Know why companies give sub-prime loans? They're very profitable. If they weren't, companies wouldn't make them.

Know why the government had to give GMAC $17.2 billion. Because they are not always profitable. They help move cars at the risk of not getting paid.
 
Their entry into the sub-prime market is a business decision. If we don't want them to make business decisions, our government should have let them fold.
 
Know why the government had to give GMAC $17.2 billion. Because they are not always profitable. They help move cars at the risk of not getting paid.

GMAC is not just in the auto loan biz. I wonder if the housing bubble bust had more to do with their problems.
 
GMAC is not just in the auto loan biz. I wonder if the housing bubble bust had more to do with their problems.

You are correct it did. Remember GM is buying an existing company, we don't know if they are in other markets. We don't know what markets they will move into.
 
Their entry into the sub-prime market is a business decision. If we don't want them to make business decisions, our government should have let them fold.

Correct, bailing out an industrial company was a bad idea.

Before anyone goes nuts, the bailout started under Bush so the above is apolitical.
 
First off, forgive me as I am posting via an iPad while in traffic.

My question is, did you post out of intellectual dishonesty, or on purpose. Please remember your initial remark towards me.
 
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Debt issues are common knowledge, but your source is heavily outdated. GM had a first quarter profit of around $850 million in 2010.

http://http://www.dailyfinance.com/story/autos/gm-drives-to-first-quarterly-profit-since-2007/19479846/

My first source from 7/22/10 is heavily out of date??

Also, profit or not, that is irrelevant to the fact that the taxpayer is still in the hole $45 billion courtesy of GM and that will not change until we see how the IPO plays out... (the point of my 2nd outdated link)
 
These losses are currently still running in the tens of billions, will have to wait and see how the upcoming IPO plays out and when the government actually gets out of GM.

Care to comment?
 
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