Just when we thought GM has decided to not purchase or build its own finance arm, our favorite automaker has announced that it will acquire AmeriCredit. The move is expected to help consumers with tarnished credit get loans, increase the amount of leases provided to buyers, supply dealers with another borrowing option for their inventory, and strengthen GM’s public stock offering. GM CEO and Chairman Ed Whitacre expects the $3.5 billion purchase to close by the end of this year.
With loans totaling $9 billion from 800,000 retail customers, Fort Worth-based AmeriCredit is smaller than lending arms of Ford, Toyota, and Volkwagen. Nevertheless, this is definetely a start to put GM back in the game for sub-prime or non-prime borrowers. Sub-prime loans accounted for 18 percent of all new vehicle purchases in April and May, according to Melinda Zabritski, Director of automotive credit for Experian Automotive.
GM, which had $23 billion in cash as of March 31, plans to pay $24.50 in cash for each AmeriCredit share. Moreover, The General claims that 4,000 of its dealerships have already established some sort of relationship with AmeriCredit over the last few months.
Political Backlash… As Expected
As you would expect, some Senators got their panties in a bunch about the announcemt and instantly cried wolf. Of these is Senator Charles Grassley (R) of Iowa, who called on the Inspector General for the Troubled Asset Relief Program (TARP) to investigate GM’s acquisition of another company when it should be repaying taxpayers who are GM shareholders.
Thankfully, GM spokesperson Renee Rashid-Merem set Senator Grassley straight when she said “We are putting in place the foundation to sell more cars profitably. That increases the value of our company and eventually the return to shareholders and taxpayers.” It appears to us that Senator Grassley skipped (or maybe slept through) business 101.
The GM Authority Take
This is good news. A major automaker such as GM shouldn’t navigate today’s fiercely competitive automotive environment without its own captive finance arm, since decisions about when, where, and to whom to lend aren’t governed by the automaker itself, but rather by a “partner” bank such as Ally Financial.
Once approved by all the regulatory bodies, GM’s purchase of AmeriCredit should further strengthen consumer confidence in The General, which should boost the company’s market share and – consequently – IPO price.
Comments
So the welfare has been received, General Motors are pumping themselves up and realizing they need the poor to continue the bail out. Let me explaine, recently GM announced it will now have a relationship with a ” Americredit” that has been in the bussiness of offering non prime and subprime auto loans. Unfortunatley, these loans must be offered because one must ask himself. who else will General Motors and Americredit prey upon, surly not the wealthy, No the desperate! Let me give an example of this. I purchased a GM car it fell apart a 1996 Lumina, a real piece of junk, the manifold wore thin and dumped water in the crank case, right at 36000 miles, Notice the mileage, this is when the dealer warranty expires, Unknowingly, my credit was ran through 15 different banks, now I have 15 inquiries killing my credit score and forcing me into that vehicle. Guess the only people that will finance the car is Americredit, who by the way can no longer make loans in California because illeagal lending practices, The interest rate is like 24.99 % percent. So I have an outrageous payment of $430 per MO. And Americredit Know’s exactly what they are doing. General motors also is now going to continue making subprime loans on somone who has decent credit. So I make all payments on time, all but three payments, because the accounting practices at Americredit cause you to get behind on your payments claiming they don’t get to their p.o. box but on fixed dates. I finally traded the car in blowing smoke out the kazoo because the cost to fix the Lemon was well over $2200.00 dollars. And even after the Americredit loan is payed in full. Account closed and payed those three lates on my credit report are reported 16/30 day lates one mo. 5/30 day lates another mo. then 6/30 day lates again and again all the while this account is showed payed and closed. I contact the credit reporting agencies and to my suprise they start the blame game claiming one or the other are reporting it inccorectly. The whole experiance with general Motors and Americredit turned into the worst decision I ever made, So Please Beware who you do business with. Surely steer clear of the Welfare recipients and their thugs who are out to jamm you and your family up. See General Motors and Americredit have these people called CEO’s who are in contact with their congressional friends making back door deals attempting to fleece you out of your good credit standing and your hard earned money. Thanks for listening I hope my story makes you think about your next purchase of a General Motors car. From a consumer to consumers.