For those of you keeping score, automakers Ford and GM (NYSE: GM
- News) first introduced the concept of large-scale 0% financing in response to flagging sales trends in the wake of the twin disasters of the 2000 bubble burst and Sept. 11. But back then, the deal was much more limited in scope, being extended only to buyers with strong credit histories, and for no more than three or four years' duration. Ford's latest gambit breaks the rules in both respects,
targeting buyers who are huge credit risks, and enticing them with longer
interest amnesties.
So they are extending 0% financing to people with bad credit histories and trying to get them to pay for their cars for a longer period of time. I guess Ford figures they can at least clear the deck of all the 06 cars that aren't selling anyway. However this article points out that they will end up stuck with those cars if these people default on their loans. Those cars already have a bad resale price because they are American made. So Ford is pretty much trying to boost this current quarter by potentially morgaging their future. I guess that is why they are thinking of going private.
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