Is GM headed for another subprime loan crisis?

[2010-1SS-IBM]

More people have bad credit now than before the recession.

Also, rates are different between subprime and prime borrowers. So figure out how much more GM finance is making off subprime borrowers versus how much their defaults are costing. It's only bad for GM if the net is a negative number. That's how all financing works, btw, not just for subprime borrowers.

I really dislike these articles that only show one side of the equation. The reason why GM is seeing such growth could just be because more people are buying more cars and/or buying more GM cars, but the author never provided the context so we just don't know.

[LostPony]

Originally Posted by 2010-1SS-IBM

More people have bad credit now than before the recession......

I don't think that is true. There are lots of stories in the media that lead one to this conclusion, but my own score tells a different story. My score is comfortably higher than 660. According to the credit monitoring service I use, my score isn't even in the top 50%.

[DGthe3]

Originally Posted by LostPony

I don't think that is true. There are lots of stories in the media that lead one to this conclusion, but my own score tells a different story. My score is comfortably higher than 660. According to the credit monitoring service I use, my score isn't even in the top 50%.

I don't know. It makes sense that durring the recession a lot of people had a hard time paying the bills and their credit score suffered as a result.

[PDXSSCE]

Jamie Dimon says there's stress in the auto-loan market — but there's a problem with that

[derklug1]

It's not just sub-prime and rates, it is length of loans. Honda's President of NA put out a letter saying that all of the car companies are cutting their own throats with 80 month and longer loans. People get stuck with no equity in their cars and can't afford to buy a newer one.

[PDXSSCE]

Originally Posted by derklug1

It's not just sub-prime and rates, it is length of loans. Honda's President of NA put out a letter saying that all of the car companies are cutting their own throats with 80 month and longer loans. People get stuck with no equity in their cars and can't afford to buy a newer one.

I read a separate article which stated FCA's Chrysler Capital is the worst offender. They process the most long term & subprime loans. Add to that their axing of fuel efficient vehicles & they've created a recipe for disaster, should there be a sudden flux in the market. I hope the government lets them crash & burn if/when it happens.

[Royal Tiger]

One of the guys I work with has fairly bad credit due to a divorce (what killed mine as well) and somehow just bought a Challenger Hellcat. I heard some of the guys talking and apparently his payments are around $800/month for 7 years!!!!

[PDXSSCE]

Originally Posted by Royal Tiger

One of the guys I work with has fairly bad credit due to a divorce (what killed mine as well) and somehow just bought a Challenger Hellcat. I heard some of the guys talking and apparently his payments are around $800/month for 7 years!!!!

[motorhead]

The other factor here is the outrageous cost of new and used vehicles these days. It nothing to see a 10 year old truck with over 100,000 miles still listing for over 25K. That's nuts. Pile that on with crazy interest rates and long terms, and you set someone up to fail. The big problem is that many of the folks entering into these kind of deals don't understand the numbers and just what they are signing up for. That's what needs to change.

[PDXSSCE]

Originally Posted by motorhead

The other factor here is the outrageous cost of new and used vehicles these days. It nothing to see a 10 year old truck with over 100,000 miles still listing for over 25K. That's nuts. Pile that on with crazy interest rates and long terms, and you set someone up to fail. The big problem is that many of the folks entering into these kind of deals don't understand the numbers and just what they are signing up for. That's what needs to change.

Ten year old trucks cost that much because they were $50k+ new. I remember when trucks were purchased when necessary for work or when one couldn't afford a car.
Are home economics classes still around? Every high school senior should be required to take it & personal finance should be part of the course.

[72MachOne99GT]

Originally Posted by Royal Tiger

One of the guys I work with has fairly bad credit due to a divorce (what killed mine as well) and somehow just bought a Challenger Hellcat. I heard some of the guys talking and apparently his payments are around $800/month for 7 years!!!!

To be fair, it's not the amount being financed, nor the payment, that should be shocking.

Instead you have to look at the buyers financial situation.

I initially financed my Shelby at 62 months..... (totally totally retarded...but not because I couldn't afford it) but because i put 18k down on the slut, and had a mid 700 credit score.

I liked a 700 dollar payment more than one that was roughly 820. And I ended up getting burnt by the bank when I refinanced...to tbe tune of a 500 dollar early termination penalty.

I pay 900 a month now (over the minimum) because I realized how badly I was screwing myself in interest because I was too lazy to secure good financing.

And this article proves that people are now (and have always) jumped at a lower monthly payment instead of being smart and spening what they can afford.

[Angrybird 12]

Or you can just wait and buy a one year old used car for a huge discount. I just bought a 2015 Impala 2LTZ program car for about $15k less than I could get a deal on a new 2016. Since my credit union considers any car under 2 years old as new I got a great interest rate too.

[snarky]

Originally Posted by Angrybird 12

I just bought a 2015 Impala 2LTZ

that's a beautiful car

[Angrybird 12]

Originally Posted by snarky

that's a beautiful car

Thanks, we really like it. It gets lots of compliments too. Many that like it have either owned a old Impala from the 60's or their parents had one. I think it is hands down the best looking Impala since the 60's.