Zero Zero Financing on Automobiles in Retrospect

Some say that the automobile industry saved the economy during the last recession. This is because auto sales are bundled into retail sales, which allowed higher numbers than actual to be reported. Many will say that what is good for General Motors is good for America, they might even cite the fact that the automobile industry saved the economy at the bottom of the last recession.

Remember when Mitsubishi did the Zero-Zero-Zero plan. This was a calculated risk and were betting on the election year gold rush to help pay for any of the fall-out in loans? Well that never came because the US interest rates stayed down, job recovery came late and Domestics along with those other foreign automobile companies did quite well. So what is happening now due to this decision to go 0-0-0, well many of those loans have gone South, and the Yen is high against the dollar and now Mitsubishi is about 2 billion in the hole at last count. The Mitsubishi bail-out cost at least $1.9 billion US Dollars. Many auto industry economic advisors had mixed opinions on this, but for the most part thought the plan for zero-zero-zero was foolish. Zero money down, Zero interest rates and zero payments until next year. This was in 2002 and today 45% of those cars have either been turned back in, repo'ed, sold at auction or are in default. All good things, which are not reality based do come to an end. Many knew there was going to be a problem as the sales winded down and we were being strung out on our payments from a few dealerships out there.

Triple zero was not a win/win for the consumer, their credit or the company. Many of those vehicles were bought by first time buyers who never even made the first payment which started many months later, yet had put over 15,000 miles on those cars and reduced its value by over 65%, ouch, that is a nightmare from a banker perspective. No wonder Corporate America wanted bankruptcy reform, even though such a reckless lending of credit was a completely foolish business move.

American consumers today are upside down in their high priced SUVs, they owe more than they are worth and those who bought gas-guzzlers in 2002 are still paying on vehicles, which are not running very well today. Most had paid sticker price or near to get the zero-zero and still others got a rebate, which was used for a down payment to make the deal. I met a gentleman who filled up his beautiful Suburban the other day. His total came to $97.00 and he was pretty depressed, I actually thought he was going to cry. We got to talking about his beautiful Venti sized SUV and he told me it cost $48,000 and had all the bells and whistles. I was impressed and asked him what he did for a living. He works for the local city and said he was able to afford it due to the zero zero program and he wanted to sell it now due to fuel costs as he is divorced and now single. He is thinking something more economical might be a better plan? Perhaps a hybrid? I guess I understand what he is saying. He explained he could not sell the vehicle because he still owes $39,440 on it and it is only worth $18,000 now. What a nice guy with a disaster of a brain for a financial planner, but alas he is not so much worse off than you, is he. Sixteen point nine million

Americans bought new automobiles on the zero zero plan. Perhaps they did not plan on this; the $3.00 per gallon gas prices. Are you one of them? How does that make you feel? Think about it.

"Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs

Margin loans not deterring investors NEWS.com.au, Australia - 12 hours ago By Tim Blue WITH Australia's share market in continuing turmoil, investors in margin loans have had a torrid six weeks yet appear to be emerging bloodied ... Australians 'wealthier' than ever before Sydney Morning Herald all 27 news articles

Allianz Eyeing Chances to Buy ABS, Leveraged Loans Reuters - 3 hours ago DE: Quote, Profile, Research) is actively looking to buy leveraged loans and asset-backed securities (ABS) whose prices have been driven down by the turmoil ...

Earthtimes

Interest rates: The new conundrum CNNMoney.com - 38 minutes ago These low long-term rates helped fuel the home building boom and the credit market's appetite for securities backed by increasingly riskier mortgage loans. ... Bernanke's Surprise Gold Seek Treasury Two-Year Notes Can't Escape Faster Inflation (Update1) Bloomberg Loans make up most of collateral posted at Fed: report Earthtimes all 102 news articles

New initiative to offer NIS 400m. in loans to businesses in North Jerusalem Post, Israel - 9 hours ago By HAVIV RETTIG A new initiative seeks to offer loans to some 85000 small businesses in the North still reeling from losses incurred during the Second ...

Fed’s collateral book mostly in loans Financial Times (subscription), UK - 11 hours ago ... made by the Federal Reserve to banks operating in the US is in the form of loans rather than securities, the New York Fed has told the Financial Times. ...

Mortgage crisis spills over into school loans Boston Globe, United States - 20 hours ago With financial aid packages going out to students over the next few weeks, financial aid directors are urging families to move quickly to line up loans ... Subprime casualties surface in Britain China Post all 6 news articles

Mortgage crisis squeezes student loans Seattle Times, United States - Feb 24, 2008 The credit crunch, which started with a panic over people missing home-loan payments several months ago, has spread like a disease, infecting a broad range ...

ARCIL to acquire Rs 2000 cr worth bad loans in FY08 Economic Times, India - Feb 24, 2008 Arcil has acquired bad loans valued at Rs 1600 crore so far this fiscal (FY 08) from around four deals, and enjoys a dominating 80 per cent market share in ... UCO Bank to clean up balance sheet Economic Times all 3 news articles

No loans for many students The Brown Daily Herald, RI - 14 minutes ago An $11.5 million increase to the financial aid budget will mean fewer loans and less debt for financial aid recipients, starting next fall. ...

Thousands trapped in Northern Rock loans Times Online, UK - Feb 23, 2008 About 175000 borrowers are thought to have been lured into Northern Rock’s controversial 100%-plus loans over the past few years. ... Mixed prospects for Northern Rock faithful Times Online Loan arranger's rescue mission Scotsman Customers face remortgage nightmare as nationalised Northern Rock ... Sunday Herald Times Online all 12 news articles