GM Is Back In The Subprime Lending Business, Baby!

GM has agreed to buy subprime auto lender AmeriCredit Corp for $3.5 billion, bringing the auto company back into the lending game. GM, of course, used to own GMAC, now separate and known as Ally bank. GMAC was created to supply the financing for GM cars, but also got into subprime mortgage lending through its Residential Capital unit — and, well, you know how that turned out.

Analysts seem to think that the move is largely positive, because lack of financing is hurting auto sales. Still, the word “subprime” makes people sad:

“If it’s properly managed it’s a positive, but if it’s driven into the ground it will be a large negative,” [an analyst] said. If the company starts offering car buyers 7 year, no-interest loans with nothing down, then it could get into trouble again, he added.

GM gets back into the subprime loan business [Marketplace]