With the Treasury Department's $6 billion gift to General Motor's (NYSE: GM) financing arm GMAC, the company will live to fight another day.So what are they going to do? In a statement, the company announced that it would lower the minimum credit score required for financing from 700 to 621.
Am I missing something? Aren't lax lending standards a huge part of what got us into this little contretemps in the first place? President Bill Muir said that "The actions of the federal government to support GMAC are having an immediate and meaningful effect on our ability to provide credit to automotive customers. We will continue to employ responsible credit standards, but will be able to relax the constraints we put in place a few months ago due to the credit crisis."
I really can't help but question the wisdom of making car loans easier to come by. Every personal finance expert on the face of the earth -- from Suze Orman to Dave Ramsey -- will tell you that taking out a car loan to buy a new car is one of the stupidest things you can do. There are plenty of used cars available in the United States, and the long-term financial well-being of consumers would be improved if they had no choice but to forgo new cars in favor of used ones.
I know: We have to save the auto industry. But the need for a bailout of the industry provides compelling evidence that it's not worth saving.
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Reader Comments (Page 1 of 1)
12-30-2008 @ 6:38PM
Ben said...
make it mandatory to have a 50% down for any loans for a new vehicle. ;)
12-30-2008 @ 9:17PM
Tom said...
The Govt. won't be happy till they put us into a depression.
12-31-2008 @ 4:58AM
Richard said...
Sounds similar to FannieMae/Freddie Mac?
Just another prolongation of GM. No real 'Change We Can Believe' in my humble opinion.