Subprime borrowers may now be able to get a car loan through GMAC
Now here is a real bright idea! Subprime borrowers may now be able to get a car loan through GMAC thanks to federal bailout money, according to The Detroit News. This is exactly what happens when your beloved government doesn’t let these companies file for bankruptcy, but instead handout billions upon billions of your hard earned income to these companies so they can make idiot decisions.
On 24 December 2008, the Federal Reserve accepted GMAC’s application to become a bank holding company in order to gain access to billions of dollars in government aid, a crucial attempt to ensure the survival of the company. GMAC is in discussions with the Federal Reserve on accessing TARP related funding to resume providing auto financing to the American consumer, as reported by the Wall Street Journal.
I guess we haven’t learned our lesson yet. You don’t give dirtbags any type of loans! This is like going back to the future with the lowered lending standards that got us in trouble in the first place across so many credit markets.
Applicants with credit scores of less than 620 will now be considered. Of course, if you have terrible problems with credit, it’s probably not a good idea to take on a long auto loan.
It’s clear this is happening right now because car sales were absolutely decimated last month. GM sales were down 45%; Chrysler was down 39%; Toyota was down 39%; and Honda was down 36%. The auto market overall was down an average of 37%.
So the nearly $6 billion made available by the government is being used to make loans to people who may not be able to pay them back — all in an effort to try to move cars that aren’t selling off dealer lots.
This is a really bad freaking idea. The answer to the lack of demand for these cars is not to go to the subprime market because these people in a very short time will not be able to make the payment and these cars will be coming back through repossession.
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