Auto financing is a common way to manage this expensive purchase that many people consider a necessity.
From 1999-2004, GMAC's mortgage and insurance businesses enjoyed a compound annual growth rate of 25%, compared to 7% for the auto financing business.
Nine years ago, when it bought Champion, KeyCorp said it was going to close branches and focus on "higher growth" businesses like mortgages and auto financing.
While moving many auto loans off its balance sheet, GMAC is also pumping more capital into its fast-growing mortgage and insurance businesses, which generate higher margins than auto financing.
BankRate.com offers auto financing comparisons for local financial institutions.
It also bulked up its capital late last year by selling 35% of its U.S. auto-financing business to private-equity firms.
In the coming days, the Treasury Department's pay czar, Kenneth Feinberg, is expected to announce compensation cuts of about 50% for the 25 highest-paid executives at American International Group, Bank of America, Citigroup, Chrysler, General Motors and the auto companies' financing arms.
Hardest-hit would be interest-rate sensitive stocks of consumer-goods, financing and auto companies.
Asset-backed securities have worked fine with financing things like auto loans and equipment leasing, notes New York securities lawyer Chris DiAngelo.
This assumption was based on the stable underpinnings of auto demand--cheap financing by car companies (and by home equity loans) and a customary replacement cycle of three years.
The Fed has actively targeted the housing sector, buying up mortgages and pushing longer-term rates lower, which has also boosted auto industry by allowing for cheap financing.
FORBES: With Detroit In A Financial Emergency, Automakers Have Record February Sales
Instead of financing it with an auto loan, they decided to pay for it by using the home equity line of credit that had been offered to them automatically when they signed their mortgage.
And auto sales, fueled by zero-percent financing offered by manufacturers, are surging and could even hit a record this month.
The auto industry selling rate now holds over 14 million in a firm used car market, low cost consumer financing and the aging car population.
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