Automakers still hungry, may get bailout for bad car loans
Last week Congress signed a bill that frees up $25 billion in low interest loans for all automakers (including non-domestics if they plan to spend the money on green tech) and suppliers that spend money in the U.S. to develop green technologies. That was a big deal for Detroit automakers struggling to stay afloat during an abominable automotive downturn. According to the Wall St. Journal, the $700 billion economic "rescue plan" fighting its way through Congress at the moment also includes money to bail automakers out of bad car loans, which in turn would supposedly go a long way toward freeing up money in the woeful car loan market. We're assuming this car loan bailout issue isn't just for Detroit automakers, as several overseas automakers offer financing here in the States, and plenty of banks are knee deep in car loans, as well. After looking at the positively radioactive sales for September, it's clear that the economic crisis is also affecting car sales. Not only are people finding it harder to get car loans even if they have good credit, but many would-be shoppers are staying away from big ticket purchases altogether until this fiscal mess gets fixed.
[Source: Blogging Stocks]
Reader Comments (Page 1 of 3)
Wobbly_ears 2:11PM (10/02/2008)
My gawd! When is this picking of the American Taxpayer's pocket is going to stop??
Is SOMEONE going to stop this? In other countries, things like these would invoke revolutions!
Crooks! Thives! All of them; American Corporations, Politicians....
HELP!!!! PLEASE!!!!
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Luis 2:11PM (10/02/2008)
One question: Who's going to bail US out?
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Josiah 2:34PM (10/02/2008)
The world. We (the US) have a pretty good credit rating still.
Todd 2:13PM (10/02/2008)
Dang it I knew I shouldn't have paid off that car loan. I could have gotten a bailout!
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TJ 2:15PM (10/02/2008)
Don't worry everyone... credit cards come next, then student loans.
But ONLY for those irresponsible people who stopped paying. Those of us who do not only get to struggle to pay our way, but carry the load for the others as well through BS bailou...rescues like this.
Forget you all. I'm moving to the Caribbean.
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Todd in Sonoma 2:24PM (10/02/2008)
Student loans first, please. That 100K isn't shrinking very fast.
Oh well. Hyperinflation here we come!
Ayatollah Rodriguez 2:37PM (10/02/2008)
Todd 100K??????? You better be a PHD by now.
SimbaDogg 6:33PM (10/02/2008)
hyperinflation? more like stagflation the way things are going
Kotse 2:21PM (10/02/2008)
The $700b bailout of banks courtesy of taxpayers/YOUR OWN $$$...in the end, you borrow YOUR OWN $$$ (with INTEREST!) from the bankers!
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Todd in Sonoma 2:26PM (10/02/2008)
Here's another thing. The Bank of Shanghai has a branch in Los Angeles in addition to the ones in China.
Are we bailing out their bad debts too?
TJ 2:55PM (10/02/2008)
"Are we bailing out their bad debts too?"
Yes.
"Described as China’s “nuclear option” in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.
It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds."
Luis 10:55PM (10/02/2008)
Josiah: I meant "us" as in you and I middle income people. I capitalized "US"to make a statement. This bail-out requires a total average $2800 dollars PER PERSON in every family, including those that aren't even old enough to PAY taxes. I don't know about you but I don't have an extra $8400 that I could just hand over to the greedy stock market. Corporate greed is an ugly monster that is coming to light, unfortunately it's the middle income families that are going to be paying for a long time...
Luis 11:21PM (10/02/2008)
@Josiah:That's us as in you and I. I capitalized US for dramatic effect. This bail out is going to cost everyone an average of $2800 per person, even if you don't yet pay taxes (children). I don't know about you but I don't have an extra $8400 laying around. This whatever type of bail out you want to call it is something middle America is going to be paying for a long time. And also, the "world" isn't going to bail anyone out if their stock markets are crashing BECAUSE of the effect of OUR stock market; no matter how good our "credit" is. The "world" economy is linked thighter than you might think.
Erik 2:34PM (10/02/2008)
More difficult to get auto loans? Good. I think it should be impossible. Financing a car is plain irresponsible. If you can't afford it cash, it is too much car for you. Get something less expensive. Yes, you can get a car that will take you to work for $1000. No, it will not be your dream car. Newsflash - BMWs are for wealthy people. Put your vanity aside. Can't afford that $1000? Take the bus while you save up. WTF
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IowaSuby 2:40PM (10/02/2008)
Yeah yeah and no one should finance a house either, I mean good grief, do you know how much interest you pay in 30 years for house! /sarcasm
Um..Erik, most people can't save $1,000 for a new dishwasher let alone the $25k for the average new car sale price. I do agree you should buy the car you need, not the car you want but good grief, very few people have enough cash sitting around to pay cash for a major purchase like a car.
Also, with several manufacturers doing 0% for 60 months, you'd be better off investing your cash in a money market account with 5% interest and financing a car.
71cuda 2:51PM (10/02/2008)
That's a great idea, if you want absolutely destroy the country. First, you can't buy a reasonably reliable car for $1000. Second, every manufacturer would go bankrupt in a matter of months, as well as pretty much every supplier and dealership.
Erik 3:12PM (10/02/2008)
Iowa -
A house is an ENTIRELY different story. First off, a roof over your head is a basic requirement of human life. A car is not. Second, a house appreciates, a car depreciates. Third, interest on a house is tax deductable. These resaons make financing a house smart and financing a car stupid.
Regarding your other comments, if you cannot save $1000 for a dishwasher, do not buy a dishwasher. A sponge and some dish soap cost $2. Wash them by hand. It is not going to kill you.
I agree than many Americans do not have $25k sitting around to drop on a new car. So, they buy a used one and start saving up for that new one. And don't tell me they cannot save $25k. If they really want a nice car, they can. Drop the cable. Turn off the AC and open the windows. Don't eat out so much. Postpone purchasing the new furniture. You can save it. It's all about priorities. You cannnot have your cake and eat it too. You cannot live like a millionaire if you only make $50k a year. I don't understand this sense of entitlement most Americans have. Nice things like new cars are rewards for hard work and sacrifice. The hard work and sacrifice are done in advance, not in arrears. Previous generations understood that, but it has been lost on current generations. Someone said this will be the first generation driving to the poor house in a BMW. How true.
Judy Zik 3:27PM (10/02/2008)
I have to agree with Erik. The problem is too many people getting into new Car loans when based on their finances they should be buying used. On top of that those who do buy new are choosing vehicles based on vanity not needs.
If the US Government is stupid enough to bail out car loans then I pity them. It is one thing to bail out mortgage loans. Real Estate will always be worth something and will always eventually increase in value. That Sebring someone bought last year though is not such a good long term investment.
Iridium 4:11PM (10/02/2008)
What the hell do you get ranked up for. You can;t be serious. I guess we all can't have hundreds of thousands of dollars in cash like you.
Sorry but we live in an age of credit becuase nobody outside of the top 5% of americans could ever save up enough money to pay cash for a new car. Even buying a used car could in fact through repairs end up costing as much as a new car over a five year period.
The problem of depreciation only comes into play if you intend on selling your car once you are done paying for it. That is the problem. Cars depreciate so much so fast because people do not hold onto the cars they buy flooding the market with 3-5 year old models.
Yes you should buy a used car but there is nothing wrong with taking out a loan to buy a car for $250-300 a month if you can afford it.
The rules are changing about deducting interest on your taxes. The Democrats want to remove this deduction in order to increase tax revenue without actually raising the tax rate. Oh yeah, homes were just going to continue to go up in value year after year unabated right. The reason why we are in this mess is becuase home values skyrocketed beyond the affordable level for the majority of Americans. Unless you owned a house you could never buy a house. The shrinking equity on homes far exceeds the tax benefits of writing off the interest.
Now I do not want a bailout under any terms. If you can't make your payments becuase you lived beyond your means then go live in a gutter for all I care. If there is a bailout I expect all of my debts to be cleared as well. The US Constitution guarantees equal treatment under the law. So if someone that has fallen behind on thier payments gets a writeoff then everyone making payments should get one as well.
Nightcrawler 5:08PM (10/02/2008)
"Sorry but we live in an age of credit because nobody outside of the top 5% of Americans could ever save up enough money to pay cash for a new car."
Wow. I guess us civil servants are a lot wealthier than I ever though we were.