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 GM Already Being Stupid....

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catbox_9
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PostSubject: GM Already Being Stupid....   Tue Dec 30, 2008 4:24 pm

It seems GM is already making stupid mistakes....

GM offers 0-percent financing to boost sales

NEW YORK General Motors Corp. said Tuesday it will offer financing as low as zero percent over the next week for several 2008 and 2009 models as the automaker makes a big year-end push to improve sales.

The news comes a day after its troubled lending unit, GMAC Financial Services LLC, agreed to take a $5 billion loan from the Treasury Department. Mark LaNeve, a GM vice president, said GMAC's approval to become a bank holding company and qualify for government funding were crucial steps to affording the new financing offers.

Previously, GMAC was unable to offer such low rates to consumers because its lack of funds, GM said.

"I think it would be fair to say that without this change ... we would not be able to do this today," LaNeve said in a conference call.

GM said it will offer zero-percent financing for up to 60 months on the 2008 Chevrolet TrailBlazer, GMC Envoy and Saab 9-7X sport utility vehicles through GMAC. The Saab 9-3 and 9-5 sedans also qualify for zero-percent financing.

The carmaker is also offering financing between 0.9 percent and 5.9 percent on more than three dozen other 2008 and 2009 models, including many trucks and SUVs. The deal runs through Jan. 5.

Many of the qualifying vehicles have seen big year-over-year sales declines and the automaker is eager to move them out of dealerships. TrailBlazer sales are down 42 percent through November compared with the same period last year. Envoy sales are off 49 percent.

The incentives come on top of numerous other deals offered by GM, which is struggling to boost sales and keep itself afloat. The GM is in the midst of its year-end "Red Tag" sale, and is also throwing numerous cash bonuses at willing customers.

Separately, GMAC said Tuesday that it will offer auto loans to customers with credit scores as low as 621, eliminating restrictions put in place two months ago that required a minimum score of 700.

Prior to the Treasury loan, which comes from the $700 billion bank rescue package, LaNeve said GM had difficulty tapping GMAC for one of its core functions: providing loans to car and truck buyers.

"Essentially, we couldn't even activate our finance company as an ally in trying to get deals done in the market," LaNeve told reporters. "I think what we're seeing today is a big improvement over that."

LaNeve also said GM was weighing a return to the leasing business, though it still lacks the financing to do so immediately. GM, along with other automakers, has dramatically scaled back customer leasing in recent months because used-car values have fallen so sharply that the practice has become too costly.

LaNeve said the previous restriction had sent a message to customers that GMAC was no longer in the financing business and added that the combination of lower credit qualifications and lower-cost loans should change that perception for consumers.

"It will certainly signal that GMAC ... is back in the game of financing vehicles," he said.

GM, along with Chrysler LLC, received approval from the Bush Administration for $17.4 billion in aid from the Treasury Department's TARP program. The loans require that the automakers submit a plan for viability by March 31.


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PostSubject: Re: GM Already Being Stupid....   Tue Dec 30, 2008 4:24 pm

That's a hell of an idea - give customers with bad credit interest-free loans Rolling Eyes
For those curious, the median credit score is 723, the mean score is 678. 621 is well below both of those numbers. Therefore people with well below-average credit can get loans with less than 1% interest.....

....and GM wonders why it's broke?

How long do they have to wait for bailout #2?


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PostSubject: Re: GM Already Being Stupid....   Tue Dec 30, 2008 8:38 pm

That is why the banks had to be bailed out


Too many high risk home loans to people that had no business getting one in the first place
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PostSubject: Re: GM Already Being Stupid....   Tue Dec 30, 2008 9:06 pm

gs78 wrote:
That is why the banks had to be bailed out


Too many high risk home loans to people that had no business getting one in the first place

You'd think the people in charge would be able to figure this out.

I didn't major in business or economics or anything like that, but even I know this:
If a person has bad credit that means they tend not to pay their bills. If a person with bad credit is given a loan, there's a good chance they won't meet their financial obligation. That's why they have huge interest rates.

Not charging someone with poor credit any interest (or less than 1%) is yet another disaster waiting to happen.

I don't have a problem giving people second (or third, fourth, fifth, etc.) chances, but they should have outrageously high interest rates until they demonstrate they are capable of paying the money they borrowed. If they pay their bills on time, let their next loan be at a lower rate.


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PostSubject: Re: GM Already Being Stupid....   Wed Dec 31, 2008 5:12 pm

Or at least some interest rates


But 0% or 1%


Even people with top notch credit should pay a small rate


That is just good business sense
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PostSubject: Re: GM Already Being Stupid....   Wed Dec 31, 2008 5:12 pm

Would have been a lot better if GM filed bankruptcy or merged
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