GMAC Financial Services will once again loan money for cars to subprime borrowers in order to stimulate sales. This sounds suspiciously similar to the subprime mortgage lending that started the entire financial mess in the first place. If it doesn’t work for mortgages, how, exactly, does it work for cars? What are they thinking?
Taxpayers are taking the risk for everything now, from the government guaranteed GM warranties to the GM buyer protection plan covering payments if a buyer loses their job and now GMAC loans to subprime borrowers. The taxpayers are loaning the money, not GM. If the loans default, we all lose. No matter where GM says the money is coming from, in reality it is now coming from us. How do you feel about loaning your money to buyers with poor credit?
We all want GM to succeed, but, enough is enough, it is time to let GM stand on its own two feet or restructure through bankruptcy. Then, they can try whatever incentives and guarantees they wish, as long as the rest of us are not required to back them up if their gamble doesn’t pay off. Every company, large and small, must bear responsibility for their own profit or loss. If GM believes they deserve our money, maybe they could earn it in the marketplace like everyone else. Government Motors, … it doesn’t inspire confidence.
Link: Automotive News