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Detroit, 2:00 PM
Tue Nov 10
30 posts in the last 24 hours

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  • posts about #700ficoscore more →

    GMAC Resumes Car Loans To Customers With Crappier Credit

    GMAC Now Officially Requires 700-Plus FICO Score For New Car Loan
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    Dsmvwl  Admin  Promote to frontpage Approve user Ban user ×
    Image of Jo Schmo Jo Schmo
    12/30/08

    In reply to GMAC Resumes Car Loans To Customers With Crappier Credit
    So if I drive my expensive "private" automobile to the GM dealer and "beg" for a car loan because times are hard I should get it right?
     Reply
    Jo Schmo was starred Jo Schmo was unstarred
    Image of zeeboid zeeboid
    12/30/08

    In reply to GMAC Resumes Car Loans To Customers With Crappier Credit
    good move GM. Way to do the same as all the other lenders below you. A car you can take back and regain your losses from pretty easially compaired to a house.


    this is good news here.

     Reply
    zeeboid was starred zeeboid was unstarred
    Image of Ash Clutchem, Pokey Master Ash Clutchem, Pokey Master
    12/30/08

    @zeeboid: One problem with cars, though...


    Houses are immobile, unlike cars. Houses have land tied to them--even if the house is destroyed, there's still value.


    For gross recovery values, a lender usually gets about 70%+ of the value of a foreclosed home (before fees), while a car is usually under 50% (minivans and crappy compacts, about 30%!).


    9 times out of 10, a million dollars in foreclosed houses will lose far less than a million dollars in cars.

     Reply
    Ash Clutchem, Pokey Master was starred Ash Clutchem, Pokey Master was unstarred
    Image of jbownsabmw- Koopas Beware jbownsabmw- Koopas Beware
    12/30/08

    In reply to GMAC Resumes Car Loans To Customers With Crappier Credit
    So they successfully held the Gubment hostage for their share of the pie?


    I would venture to guess there was not a single person at GMAC who believed requiring a 700 was good business practice.

     Reply
    jbownsabmw- Koopas Beware was starred jbownsabmw- Koopas Beware was unstarred
    Image of Ash Clutchem, Pokey Master Ash Clutchem, Pokey Master
    12/30/08

    @jbownsabmw but still wants GM to survive: Let's use the 80/20 rule for profits and losses for a second. The lowest 20% of the credit scores will provide 80% of the profit and 80% of the losses. However, when times get tough, those groups often provide 90% of the losses or more.


    So sometimes the easiest thing to do is just to cut off the lower 20% of your customers (or even the bottom 50%, possibly eliminating 95% of all potential losses) in order to simply keep the ship afloat...and to be able to reduce overhead in loan servicing (such as repos).


    The rub is that you might break even, but at least you don't get hit with the massive downside in losses. And the other side of that coin is that when (if) things turn around for the better, your portfolio is not profitable because all your customers are upstanding individuals who never miss a payment.

     Reply
    Ash Clutchem, Pokey Master was starred Ash Clutchem, Pokey Master was unstarred
    Image of jbownsabmw- Koopas Beware jbownsabmw- Koopas Beware
    12/30/08

    @The Name's Ash78, Housewares: I stand corrected.
     Reply
    jbownsabmw- Koopas Beware was starred jbownsabmw- Koopas Beware was unstarred
    Image of Ash Clutchem, Pokey Master Ash Clutchem, Pokey Master
    12/30/08

    @jbownsabmw but still wants GM to survive: No correction intended...just expanding on it. 700+ is a very safe practice, just not profitable.
     Reply
    Ash Clutchem, Pokey Master was starred Ash Clutchem, Pokey Master was unstarred
    Image of YotaLoLux YotaLoLux
    12/30/08

    In reply to GMAC Resumes Car Loans To Customers With Crappier Credit
    Two words: Subprime Cadillacs.
     Reply
    YotaLoLux was starred YotaLoLux was unstarred
    Image of DoctorNine's D9 Cat DoctorNine's D9 Cat
    12/30/08

    @YotaLoLux: Oh, well done...
     Reply
    DoctorNine's D9 Cat was starred DoctorNine's D9 Cat was unstarred
    Image of Ash Clutchem, Pokey Master Ash Clutchem, Pokey Master
    12/30/08

    In reply to GMAC Resumes Car Loans To Customers With Crappier Credit
    Coming from the world of consumer lending, 620 is about our median customer. That's far from "crappy" in the consumer world. In fact, that's about the highest floor I'd allow if I ever expected to make a profit.
     Reply
    Ash Clutchem, Pokey Master was starred Ash Clutchem, Pokey Master was unstarred
    Image of six six
    12/30/08

    @The Name's Ash78, Housewares: Profit, eh?
     Reply
    six was starred six was unstarred
    Image of Ash Clutchem, Pokey Master Ash Clutchem, Pokey Master
    12/30/08

    @six: Sorry, forgot we were talking about GM here. That's not part of the business plan.
     Reply
    Ash Clutchem, Pokey Master was starred Ash Clutchem, Pokey Master was unstarred
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