Yesterday, we took a "Whose Fault Is It Anyway?" look at consumers who used carmaker's easy credit to buy (in the ironic sense of that word) vehicles they couldn't afford. Today, the San Antonio Business Journal reports that The Alamo City guv'mint has teamed-up with Ford "to make it easier for more working individuals and families to buy a new or used car." Here's the deal: low income buyers save up $1000. FoMoCo and San Antonio's Department of Community Initiatives match the buyer's grand with two more, creating a $3k down-payment towards a new or used vehicle from one of eight participating Ford or Mercury (!) dealers. To qualify for the "down payment assistance program" the buyer's income must not exceed 300 percent of the federal poverty level (that's $61,950 for a family of four). Applicants must also be a San Antonio resident, an insurable driver, not have declared bankruptcy within the last seven years and be "current" with all creditors. (Driver's license?) Oh, and they have to qualify for financing. Welcome to America!
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Philantrophy aside…I see another aspect to this move. A move to sell cars to people Ford can no longer afford to carry on their finance arm (taking huge hits from already bad loans on credit risk buyers). Proof is I’ve seen many a Ford owner come in with absolutely terrible credit and try to trade in a car with $5-$10k in negative equity. Ford won’t even lend back to them b/c they are so close to default and carry negative equity that puts that customer out another 4-5 years before they’d be able to surface from buying that new Ford.
The automakers that need to get rid of piling up inventory have been hit hard from default (just look at Mitsu and the problems they had – loading off cars into fleets to inflate sales (50%!) and giving loans to anyone with a pulse) – it’s all catching up to them. Already done is making it harder to file for bankruptcy. Now with Ford getting local municipalities to help mitigate the risk of selling to such bad credit risk buyers gives them a sale. It’s like the payday loans issue.
This is just criminal. Using public funds to help people buy a car? The Texas legislature pulled a stunt like this, and many of them are going to lose their seats over it.
It doesn’t matter what the benefits are, the negatives are overwhelming. I guess I can retire now instead of later. The rest of you can can pay for my needs and wants.
Ford’s stock is in the mid 5’s now and dropping. They have to do something to move the metal, how about throwing in a camping trailer if you buy a new car, so when your house is foreclosed you still have a place to sleep.
This isn’t a Ford thing, this is a statewide initiative with plenty of dealer support from every entry-level brand.
http://www.tceq.state.tx.us/implementation/air/mobilesource/vim/driveclean.html
I haven’t had the time to look into it, but the relationship between dealers and the state government has me less than thrilled.
(Driver’s license?)
No that wold eliminate the illegal immgrant population, probably a significant percentage of the population in SanAntonio. Adn, certainly a PC faux paux.
This is just criminal. Using public funds to help people buy a car?
Versus using them to help pay their rent, buy their groceries, pay for their utilities, and eventually even buy a house?
# Lumbergh21 :
January 17th, 2008 at 8:01 pm
. Using public funds to help people buy a car?
Versus using them to help pay their rent, buy their groceries, pay for their utilities, and eventually even buy a house?
yep–that’s criminal too. if you don’t pay your taxes, they’ll claim your house. if you don’t leave your house, they’ll remove you. if you resist, eventually guns will be pulled. in effect, you are being robbed at gunpoint, and no one has the right to do that to you.
home and land ownership are privileges, not rights. why should i pay my own mortgage and someone else’s too? i also don’t need two grocery bills and two electric bills. i sure as heck don’t need to help someone buy a NEW car.
Lum,
In fact, it seems that most the people we are buying all those things for simply use their own funds or charity to get cars now. I can see a reasonable argument for a social safety net, but this has gone too far.