GM Has No Shame

If you aren't convinced the next downturn will be a showstopper, take a look at the article below where GM is seeking leniency in loaning to sub prime buyers. Simply shocking.

GM Wants More Subprime Customers Approved For Auto Loans

General Motors, looking to boost sales and gain customers, wants to give more auto loans to consumers with bad credit. But without its own captive lending arm, it is losing customers to other automakers, who are more willing to take on the risk of approving an auto loan to a customer with less-than-perfect credit.

GM's top North American executive Mark Reuss said a shortage of subprime lending is holding back sales in the U.S., the AP reports. GM sold most of its former auto finance unit, GMAC (now called Ally), in 2006.

Ally provides consumer auto loans not only for GM, but for Chrysler, along with dealer floor plan financing. Therefore, Ally, not GM or Chrysler, decides who gets a car loan. If GM decides to try and buy back its stake in Ally or start its own finance arm, it can decide who to give car loans to.

And since Ally lost money in the mortgage crisis, it is nervous to lend money to car shoppers with bad credit. GM knows that bad credit car loans are a good source of profit, since the interest rates tend to be very high at about 10 to 20 percent.

According to Experian automotive, about 16 percent of all new-vehicle loans approved in the fourth quarter of 2009 were to customers with non-prime credit (those with credit scores below 620).