GM wants more subprime buyers; will lender agree?

[FarCenter]

By DAN STRUMPF and TOM KRISHER,

DETROIT – If your credit isn't good, General Motors Co. still wants to sell you a car.

The problem is, it can't. At least not in big numbers. That's why the automaker wants more control over its lending again.

GM's top North American executive Mark Reuss, under pressure to quickly sell more cars and boost GM's value as it gets ready to sell stock to the public, said a shortage of subprime lending is holding back sales in the U.S.

But the automaker's main lender, Ally Financial Inc., has little appetite for risky loans, having spent the last few years cleaning up its own financial mess caused mainly by its failing mortgage lending business. Both companies are majority-owned by the U.S. government.

For decades, GM owned Ally, writing its own loans through the so-called captive finance arm. Nearly every automaker makes loans in such a fashion. But a cash-starved GM sold most of Ally — formerly known as GMAC — in 2006.

<SNIP>http://news.yahoo.com/s/ap/20100516/ap_on_bi_ge/us_gm_subprime_buyers

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Wasn't pushing more cars on the market by making bad loans to deadbeats one of the ways GM got into trouble?

[Statistical]

1. Horrible idea. Most of the losses in GM actually came from GMAC.

Now they are saved and actually moving towards profitability and they want to start lending to deadbeats again in order to move product.

LOOK IN THE REARVIEW MIRROR GM. The massive losses due to defaults sunk GMAC.

If banks are unwilling to lend to people (and banks take way to much risk as it is) then maybe you shouldn't be lending to them either.

[Taitertots]

2. "Dead Beats", not the best term for the victims of the Bush economy

Lets call it like it is. Sub prime, just means poor.

What got them in trouble in the first place is the economic meltdown caused by Wall Street.

[Statistical]

3. Credit and income are not related.

Not many poor people were buying homes or brand new cars.

Subprime means people with a history of not paying their loans. The idea that GM wants to get back into that "action" is utter lunacy.

Defaults in subprime killed GMAC and GMAC brought down GM.

[Taitertots]

4. Yes they are, albeit not directly

"History of not paying loans" and "Poor people". How does one usually end up being unable to pay for a car loan? You don't ever become too rich to afford your car. The fastest way to a low credit score is to be poor.

No, the economic meltdown caused by Bush economics killed GMAC. What you are doing would be like blaming companies that went under during the Great Depression for not being Depression proof.

[Statistical]

5. Honda & Ford motor credit for example didn't implode durring the crisis.

Why because you actually have to have moderately good credit to get a loan with Honda.

As far as you need to be poor to get bad credit that is silly. By that logic nobody middle class or rich would ever file for bankruptcy.

Spending > Revenue is what leads to insolvency.

Generally speaking to get a new car you need enough income in order to handle a $300 - $500 payment. Someone with insufficient income isn't subprime they are simply not eligible.

Poor credit rating is the result of person not paying their bills in the past. GM wanted to "Tap" that market is utter stupidity. GM shouldn't be trusting $20K - $40K to someone with a bad record of not paying all the loans they were given in the past.

[Taitertots]

6. If there wasn't an economic meltdown orchestrated by Bush

There wouldn't be a problem at all.

Spending projections from earlier > Revenue after Bush economic meltdown is what leads to insolvency. Sky rocketing systemic unemployment is what leads to insolvency. Collapsing investment values is what leads to insolvency. These people are victims of the Bush economy.

I'm going to look around on the internet and see if we can't pull up some average credit ratings broken down by income. We should let the facts decide this one, not either of us speculating. Is there a positive relationship between credit rating and income?