The New York Times reports the European Central Bank may have inadvertently helped buyers looking to take home a new Volkswagen Up! secure low-interest loans. Volkswagen Financial Services was one of many institutions that took advantage of the €1 trillion the central bank set aside to be loaned out at just one percent interest. Volkswagen borrowed €2 billion (about $2.6 billion USD) of that money, and plans to offer the cash to buyers in the form of loans with low three to four percent interest. While the goal of the low-interest loans was originally to stabilize uncertain markets, automakers and other industries are taking advantage of the effectively free cash.

Mercedes Bank has already taken advantage of the generous terms, and PSA Financing, a unit of Peugeot and Citroën, has made mention of doing the same in an attempt to stave off looming poor sales. According to The New York Times, the European auto industry may be facing down its second downturn since 2009. Registrations for new vehicles were down 8.3 percent between January and February of this year compared to the same period in 2011.


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    • 1 Second Ago
  • 16 Comments
      Zed
      • 2 Years Ago
      Customer: VW, mine? Euro Bank: UP yours!
      carfan
      • 2 Years Ago
      and then some idiot southern red neck republicans are bitching about the US government helping the American auto industry. Without their government help, the japanese and koreans would still be building one manpower rikshas...Some of you americans are sabotageing your own country, you are that stupid
        Gabriel R
        • 2 Years Ago
        @carfan
        49 > 2 . And VW didnt even use all those 2 billion themselves
      TopGun
      • 2 Years Ago
      Wait a miniute! You mean to tell me that countries have policies and programs to benefit their domestic industries!? How can this be? It MUST be a mistake. If they just made cars that people wanted to buy, then problem solved. The next thing we'll hear is that the Japanese car market has been essentially closed to other countries for years. :)
      • 2 Years Ago
      [blocked]
      Rotation
      • 2 Years Ago
      The is almost certainly true, but you can't blame VW. The ECB has been handing out loans like candy at the discount window, you can't blame VW or anyone else for taking advantage of it. You would too if it were you.
      Scr
      • 2 Years Ago
      So, I borrow money at 1%. You then lend money and tack on another 2% to 3% to the borrower? You then pocket the extra 3% and pay back the loan plus the 1%? I'm sorry, thats sounds criminal. You make 3X profit on the backs of what people have unwillingly lent to you by charging said people for borrowing their OWN MONEY from you! Why not just let the people directly borrow their own tax money at the 1% interest and cut out the automaker all together?
        Rotation
        • 2 Years Ago
        @Scr
        The money was invented out of thin air anyway. It isn't tax money, it's just invented money. People are considered too risky to be eligible for loans at the discount window. These loans are taking place because the ECB has a goal of increasing credit availability. These loans fulfill that goal well.
        chickenflauta
        • 2 Years Ago
        @Scr
        What? Do you have any idea how financing works? If I'm Volkswagen and I lend you the money that I borrowed at 1% and tack on another 2 to 3%, it's to cover the RISK that you might default on the loan over the length of the loan period. No one forced you to finance the vehicle. You could have paid cash, or purchased a less expensive vehicle, and in the absence of the ECB loan, you would have paid a higher rate to finance at ANY other institution. If people were able to directly borrow from the government, then what happens if they default or can't pay the loan payment? The government has no money. That's an absolutely stupid idea. Banks offer low-interest loans to encourage investment in the economy. This is usually meant in financial terms, but if it also helps to sell some cars in the face of a stagnant industry, then what's the problem?
      mawhalen53
      • 2 Years Ago
      ZOMG OBAMA MOTORS!!!11!!one!!!11
      Sorten Borten
      • 2 Years Ago
      I have also taken a €3 billion loan from ECB and have been making short term loans to my friends @ 5%. Easy money, baby.
      handwritinglol
      • 2 Years Ago
      CUTE
      k_m94
      • 2 Years Ago
      Why is the title shouting at me?! It isnt even saying anything exciting! In all seriousness, I can't understand why VW would need to put an exclamation mark at the end of the name! It just doesnt make sense, you know?! Soon people might start overusing the ! mark (!) putting it! at! the! end! of! everyth!ng!! !t's! an! exc!amat!on! mar!k! !nvas!on!!!!!!!!! H!E!!L!!!P!!!!!M!!!!!!!E-!!!!!!!!!! !!! !! !!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!
        Rotation
        • 2 Years Ago
        @k_m94
        It's the name of the car. Up! Nissan also has the LEAF. And then don't forget BMW MINI. None of this is AB's fault. But yes it's a big frustrating.
      Thunderbuck
      • 2 Years Ago
      The headline makes this sound like some kind of shocking expose, but when you think about it, this is exactly the kind of thing that money from the Central Bank was intended for. It helped the manufacturers sell cars, keep their plants running, and--most importantly--keep their workers employed, so that they could continue to run their own households, pay their mortgages, etc. I don't get the problem here.
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