Here's what a credit crunch is...

[Mr. Bloom]

Copied from a GMAC Press Release:

GMAC Financial Services Statement on Automotive Finance Purchase Policy

DETROIT (Oct. 13, 2008) GMAC Financial Services today implemented a more conservative purchase policy for consumer auto financing in the United States as a result of the lack of stability in the global capital and credit markets. The changes include limiting purchases to contracts with a credit score of 700 or above. Additionally, the company will restrict contracts with higher advance rates and longer terms. Last week GMAC also increased by 75 basis points the rate it charges dealers for providing non-incentivized consumer auto financing.

These changes in pricing and underwriting are related to the current market environment, which has reduced access to funds and increased the cost of funds. The company currently expects these actions to remain in place until the credit markets stabilize and accessibility improves.

Translation:

"We can't borrow, so we won't lend unless you are gold plated...and even if you are, it will cost more."

Doesn't affect me directly, but you can be sure that many dealers and manufacturers will be hammered by this

[GLC1968]

The typical American way of life is about to change - drastically.

[ilima]

Can't be good for GM's already sorry bottom line...

[Fredwina]

The rumor i heard is the GM will swap its half of GMAC to Cerebus(who owns the other half) for Chrysler.
Not sure how this helps either party.

[DDH]

Seems we have gone from one extreme to another.

Credit has been way to easy for way to long, and now it will be so hard that everyone will be made to suffer, including those that have tried to do things right.
I always thought paying my bills on time, paying credit cards in full every month, keeping my credit clean, paying my taxes, not being up to my neck in debt, having some savings and a few investments would help me in the long run.

Now I feel like it was all for naught. I'm no better off than the guy that didn't pay his bills on time and got himself in way to much debt.


Well, that's a little extreme, but you get my drift.

[Mr. Bloom]

Now I feel like it was all for naught. I'm no better off than the guy that didn't pay his bills on time and got himself in way to much debt.

You've done the right thing and it's not for naught...the guy who didn't pay will suffer considerably more.

That's the difference between the "bailout" that is recapitalizing banks vs. the plan to purchase the defaulted mortgages. Purchasing the defaulted debt would have had the effect you feared...the bailout will replace the liquidity lost in the system without forgiving overextended consumers.

Keep doing the right thing

[madscot13]

I know it is one of the more trivial aspects of the credit crisis but have you ever noticed how easy it is to get a credit card. Basically everytime you walk into a major retailer they offer you a card and it will be accepted on the spot as long as you already have one. I think it is another facet of the easy come, easy lend policy.