The U.S. Treasury has agreed to lend $6 billion to GMAC LLC (GOM), the financing arm of General Motors Corp. (GM), in the latest government effort to keep the biggest U.S. automaker out of bankruptcy.
 
GMAC immediately announced looser credit lending standards that could make approximately 60 million Americans eligible for its car loans and leases. The company also said it would expand further into the retail banking industry with plans to access even more funds from the Treasury’s Troubled Asset Relief Program (TARP). 

GMAC will “continue to pursue” other ways to boost liquidity, including applying for a Federal Deposit Insurance Corp. guaranty program and attracting retail deposits from consumers, Toni Simonetti a spokeswoman for GMAC told Bloomberg News.

“This is part of our strategy to position GMAC for long-term stability,” said Simonetti. “The reason we’re doing this is so we can provide credit to consumers; we’ll put these funds to use right away.”

The Federal Reserve granted approval on Christmas Eve for GMAC to become a bank holding company – if it could prove it had at least $30 billion in capital. The approval gives GMAC access to financing under the $700 billion TARP Program. To raise that $30 billion, GMAC – owned by GM and Cerberus Capital Management L.P. – convinced about 75% of its bondholders to restructure outstanding debt. Details of that deal were not released.

The agreement represents another new bailout from the Treasury’s TARP program – this time for the auto finance industry. The rescue plan was originally approved by Congress to buy troubled assets from banks. It has since been tapped by the Treasury to prop up investment banks, troubled insurers, and now carmakers and their finance companies.

“Philosophically, I’m not very happy about the fact that the government has to save an auto-finance company because management ran it into the ground,” Thomas Atterberry, who helps manage $3.5 billion in fixed-income assets at First Pacific Advisors in Los Angeles, told Bloomberg News. “The relationship with GM is probably a key reason it’s being bailed out.”

But some analysts applauded the government’s move.

“If you bail out GM, but no one can afford to buy the cars or get financing on the cars, the cars will just sit there on dealers’ lots,” Scott Talbott, senior vice president of government affairs for The Financial Services Roundtable told USA Today. “This is the other end of the bailout deal.”

The new credit standards could allow an additional 60 million borrowers, or approximately 20% of the U.S. population, to qualify for loans.

GMAC said that it would now provide retail financing for car buyers with a score of 621 or more on the FICO scale, a widely-used measure of Americans’ creditworthiness, according to the Financial Times.  Credit scores generally range between 300 and 850.

Many analysts draw a line in the sand at 620, considering a score lower than that to be “subprime.”  Scores higher than that are considered to be more creditworthy. GMAC had tightened its lending standards two months ago, limiting its financing to customers with credit scores higher than 700.

With its credit rating mired in “junk” territory, GMAC has been locked out of credit markets in recent months. The company only financed 6% of GM’s retail sales in November, as compared to almost 50% a year ago. GMAC did not write a single lease in November.

GM also sought to capitalize on the GMAC rescue by announcing new low-interest and interest-free offers on many of its vehicles, but only if they’re financed by GMAC. Mark LaNeve, the carmaker’s North American marketing chief, said the company is using the incentives “to encourage our customers to get back into the game.”

The new financing is the second step in the government’s General Motors’ rescue plan — a crucial hurdle that could have forced it into bankruptcy even after the company received a massive loan approved by the Bush administration.

The investment in GMAC is “part of a broader program to assist the domestic automotive industry in becoming financially viable,” the Treasury said in a statement yesterday (Tuesday).

The funds come on top of the $13.4 billion in loans the government promised General Motors and Chrysler earlier this month.

GMAC will pay an 8% dividend on the Treasury’s $5 billion of senior preferred equity. The company will also issue warrants in the form of additional preferred equity that will equal 5% of the preferred-stock purchase and pay a 9% dividend if exercised.

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Investment News

Money Morning
http://www.articlesbase.com/investing-articles/gmac-loosens-credit-reins-after-6-billion-treasury-loan-704435.html

According to the National Consumer Council, Britain’s personal debt has hit the £1 trillion mark for the first time ever – that’s more than the entire external debt of Africa and South America combined. The reality is that people are starting to owe more money than they make; furthermore, data shows that borrowing is often based on "catching up" with expenses rather than over-consumption – suggesting that the UK’s population is losing an ongoing battle to keep up with the rising cost of living.

About six million families in the UK are currently struggling to keep up with credit commitments – a situation which has led to rises in personal insolvencies, IVA and bankruptcies. Moreover, interest rates are rising – a clear warning that consumers may be headed into even deeper trouble if they don’t take greater care of how they manage their debts.

So what can consumers do to keep up in the face of rising prices while ensuring they don’t fall into the debt trap? Furthermore, what options are available to those who have already found themselves in financial difficulty?

To begin with, it’s important that consumers carefully consider all their options when it comes to borrowing money with respect to bankruptcy. For instance, while about 80% of the UK’s borrowings are related to mortgages and re-mortgages, a total of £168 billion is still in unsecured form. And while secured loans require greater collateral to guarantee repayment, they also carry advantages which can outweigh unsecured loans in the long run. Secured loans, for example, offer lower interest rates and better loan repayment terms, such as extended repayment options or variable interest rates. This means that loan applicants have more savings options because they can choose how quickly they repay their loan.

The opportunity to repair credit scores is another advantage to secured loans: as long as borrowers make their repayments on time, lenders will continue to make positive credit reports to all the major credit reporting agencies. Applying for a secured loan also automatically increases a consumer’s chances of qualifying to borrow money – even if he or she has had credit problems in the past.

In the end, a bit of good advice and rigid responsibility can help any consumer build, uphold, or regain good credit and financial stability. And while responsibility ultimately lies in the hands of the consumer, a comprehensive and qualified lender can help with the rest.

Martin Mcallister
http://www.articlesbase.com/credit-articles/what-consumers-can-do-in-the-face-of-rising-debt-and-increasing-interest-rates-88778.html

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Are you contemplating as to whether you must make an application for a credit card? Well, the answer fairly simply is ‘Yes’ – you must sign up for a credit card ( this is right for the general public ). The credit cards appear to have transformed our lives. Actually one can term credit cards as a revolution.

Today, you find advertisements in Television / papers / internet site / shops and virtually anywhere and everywhere ; all asking you to apply for a credit card. When you look around, you see that many people have credit cards. Actually most of us have multiple credit cards.

Everybody appears to make an application for a credit card.

Hence why should you make an application for a credit card? There are a lot of benefits linked with credit cards ; nevertheless the most vital benefit is the convenience that they offer. For the majority, this is the prime and the only reason that starts them to make an application for a credit card. This would not have been the case a couple of years gone, when not that many merchants accepted credit cards. Nonetheless today, most merchants do accept credit cards. Hence rather than carrying plenty of money on you ( which is both awkward and hazardous ), you can just carry a tiny piece of plastic with you. Also , you get interest free credit i.e.

You do not have to pay the bills until the next monthly billing cycle. Therefore you should purchase now and pay later ( when your income arrives ) a good reason to make an application for a credit card. To contribute to that, there are specific merchants that offer interest-free instalment payment schedule i.e. You can make a massive purchase today and pay for it in instalments on your credit card. So credit cards works as instant long-term loan too ( not only a monthly loan ). One more reason to sign up for a credit card is the rebates on shopping. This is made viable by the tie-ups between credit card corporations and the merchants. So credit cards offer various benefits. There are many ways you can make an application for a credit card – you can sign up for a credit card in the flesh, you can sign up for a credit card on the web and you can make an application for a credit card on telephone too ( by asking the representative to meet you ). You’ll as such be approached by lots of sales reps, all asking you to sign up for a credit card with their company. To make an application for a credit card, you’ll need to fill-in a credit card application ( which is simple to fill and the representatives of the credit card company will aid you in that ). When you make an application for a credit card, you fundamentally enter into an understanding with the credit card supplier ( the form that you fill when you sign up for a credit card is actually a deal ). After you’ve submitted your application, the credit card company conducts certain checks to ascertain your credibility ; and if everything is fine, you receive the credit card. Hence making an application for a credit card is straightforward and to make an application for a credit card or not to make an application for a credit card is a matter of personal preference. Nevertheless for the general public who do not have any credit card, the recommendation is make an application for a credit card.

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Can a credit repair company assure results? Definitely not! That is like a brain surgeon guaranteeing that you will not die on the operating table. Any credit repair company that guarantees that they can improve your credit score or specifically remove detrimental information from your credit report is lying for 2 reasons.

First, the regulation says that credit repair companies CANNOT assure RESULTS. They can clarify what they hope to achieve and how they will go about achieving it, but they cannot assure to remove adverse items from your credit report. There is no official training or education required to own a credit repair company. This means that you take your odds when you employ one.

Even if you do find a credit repair company with years of experience in the industry, they cannot guarantee results. While there exist several ethical and competent credit repair companies, there are many more that are fly by night companies. For years, the unscrupulous credit repair companies made guarantees that they could not deliver on. As a end result, the FTC intervened and set up recommendations to guard consumers from unscrupulous credit repair firms.

The 2nd reason that credit repair companies cannot guarantee results is because it is an arbitrary process, that is not based on any hard and fast rules. Credit repair is contingent upon the system employed and the experience of the particular person doing the repairing. Even the most well intentioned credit repair professional may not achieve any results if they are not using a top rated credit repair system. Unfortunately, there are quite a few credit repair systems in existence that are unsuccessful and outdated.

The only way to guarantee results is by making use of a credit repair company that combines well written materials that are up to date, and offers added support to get you through the process. You do not have to be a credit repair professional to obtain a credit repair system of this caliber. Any consumer can acquire good quality credit repair systems, for A FRACTION OF THE COST of employing a credit repair company.

Before you hand over a thousand dollars to a credit repair organization for services that cannot be assured, look at restoring your own credit. Tens of thousands of consumers just like you are repairing their own credit for a FRACTION of the cost and with far better results.

It is recommended that you pick a credit repair system that offers more than credit repair form letters. An effective credit repair system comes complete with current and particular dispute tactics, up to date practices on specific creditors and credit reporting agencies and ongoing help. There are not many credit repair systems on the market today that provide a credit repair package with all of these necessary components.

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In years past, the credit repair industry was tainted by fly by night credit repair clinics and other credit fixing scams. Despite the need that many people had to get help with repairing their credit, it was hard to find a credit repair company they could trust.

Today, the credit repair industry has matured thanks to increased awareness and federal regulation. The keystone of this regulation is the Credit Repair Organizations Act, also known as CROA. Recognizing the value of professional credit repair services, Congress enacted CROA in order to define appropriate actions of a credit repair organization and to outlaw many of the practices typical of a fraudulent credit repair clinic.

While there are still some fraudulent credit repair organizations trying to take your money, by understanding the basic ideas of CROA, you can easily identify these scams and make sure you avoid them. Knowing what things credit repair companies are and are not able to do, will keep you from becoming a victim.

Below are three key points of CROA and what they mean to you as you are shopping for a credit repair company.

1) Credit repair organizations cannot charge fees for services before they are rendered

Most credit repair scams start off the same way. You are required to pay a large upfront fee, often times in the range of hundreds or even thousands of dollars. Then, after you have made the payment, the credit repair company does little or nothing to repair your credit and in some cases, simply disappears with your money.

To keep you from becoming a victim of this type of scam, CROA prevents credit repair companies from charging for services before they have been provided. If a credit repair company charges a set up fee, they cannot collect that fee until after the task of setting up your case has been completed. If a credit repair company charges monthly fees, those fees cannot be collected until after a month’s worth of services have been provided.

Keeping this requirement in mind is probably the most important thing you can do to avoid becoming a victim of a credit repair scam. Even today there are companies like Champion Credit Consulting and Credit Clean who will try to charge you 5 and 23 before they have done anything to repair your credit.

2) Credit repair organizations cannot make incorrect or misleading statements

Preying on the naivety and lack of knowledge of people looking to improve their credit, many credit repair companies entice people with claims of improving their credit score 100 points in 60 days or removing bankruptcies from their credit reports. The truth is that while it is possible for each of these things to happen, no credit repair company can promise that they will.

In fact, no credit repair company can promise to remove anything from your credit reports because ultimately, it is up to the credit bureaus what items are listed on your reports. Disputing credit is not failsafe. There are cases where no matter what you do, a particular negative item will not be removed from your credit reports.

Any company that promises to increase your credit score or remove any negative items from your credit reports is violating the law. According to CROA, and the nature of the credit system, the best any credit repair company can do is promise to put forth a best effort. Just like in a court of law, a lawyer can promise to work as hard as they can, but they cannot promise that you will win over the jury.

3) Credit repair companies must inform you of your rights

The credit system is not easy and many people do not adequately understand their rights within the system. This lack of education makes it easy for con-artists to prey on the unaware.

So you do not get caught off-guard, credit repair organizations are required to inform all prospective customers of their right to order their own credit reports and their right to dispute the questionable information they contain. They are also required to inform you of your right to cancel your credit repair service within 3 days of signing up for no reason and with no penalty.

When signing up with a credit repair organization, CROA dictates that you should be presented with a disclosure statement titled “Consumer Credit File Rights Under State and Federal Law”. This statement describes the rights mentioned above.

CROA has changed the landscape in the credit repair industry and has been very effective in helping the FTC identify and prosecute shady credit repair organizations. Because of CROA, you can feel confident that your money will be well spent when you enlist the services of a legally compliant credit repair company.

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It is said that the American dream is home ownership. While there is usually more to it than that, owning a home is one thing that most people aspire to, especially when they have children to which they want to give a secure and lasting base. Owning a home is simple if someone wills it to you, or if you simply have enough money to buy one outright, but for many families, it is so much more complicated than that. In fact, so many have bad credit despite their best efforts to stay ahead of the game, and feel that home ownership is out of the question for them. If you are one of these people, learn about credit repair so that you too can have a place to call your own.

Don’t let the housing market get you down if you want to have a home of your own. Some people have homes that have lost half of their value, so they feel that they are paying for nothing now, but those same homes can regain in the future. If you are worried about your bottom line and making money with your home, this is not the best time. However, if you just want something you can stay in for life that is your home, those things don’t matter as much. You do have to know about credit repair, however, if you want that home to be yours.

Your credit is a history of what you have paid, and what you have not paid. There are many that have a bad credit rating simply because they have gone through an illness. Though some lenders are more forgiving when it seems all you owe are back medical bills, lenders won’t give you a loan if your credit score is under a certain number no matter what your issues may have been. A general guideline is 620 at a bare minimum, but each lender has their own set of standards. You have to know about credit repair to get your number above that if that is your main problem.

One thing to know about credit repair is that you have to pay off those old bills. Know your state’s statute of limitations. Your oldest bills may fall off your report soon, so concentrate on the newer ones. Just one late payment sent to collections can knock a hundred points off your score if you started out high. Take your latest collection accounts and pay them off as soon as you can and work your way backwards. Avoid settlement amounts if you can. Paid in full is the best listing you can have.

Another thing to know about credit repair is that you want to pay down high interest rate credit cards. Having one or two cards that are up to date and not maxed out helps your credit, but having a ton of them that are topped out can hurt. You need good credit as well as a clean record of paying off your debts. Revolving credit looks good as long as it is not a high percentage of your income. Talk with a mortgage broker about your options, what you can change and what you should leave. You’ll be on your way to home ownership in no time.

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Think you’re ready for a Visa student credit card? Most students assume they are without giving the matter very much thought. If this describes you, then you might be biting off more than you can chew. Before you jump into the world of credit cards with both feet blind, make sure you ask yourself these three important questions…

1. Who’s Tab Is It?

First and foremost, before you decide whether or not you’re ready for any Visa student credit card you’d better make sure you have a way to pay the statement when it comes in each month. If you don’t have a job you won’t be able to pay your bill. Remember, this is your credit card — not your parents’. It’s your responsibility to pay it.

2. How Disciplined Are you?

Okay, so you have a job and you can pay the bill when it comes in. The other question you have to ask yourself is how disciplined are you? Will you have the willpower to use your Visa student credit card wisely, or is it just going to put you under a pile of debt?

If you can barely resist the temptation to spend when you have cash in your pocket or a checkbook in your purse, how are you going to resist it when you have plastic in your wallet?

Remember, a Visa student credit card is not a license to spend. It’s supposed to be a tool to build your financial future and help you out in case of emergencies.

3. Do You Realize This Will Go On Your Permanent Record?

Another thing you need to consider when applying for a Visa student credit card is that everything you do with it is going to go on your “permanent record”. No, not your academic record, but a record that is just as important.

If you make a late payment or max your card out it’s going to show up on your credit report. And it’s not just going to be there for the world to see — it’s also going to lower your credit score. You might not know it yet, but your credit score can make or break your financial future. This can interfere with your plans to get an apartment or buy a car when you graduate.

The above questions raise some valid points. If they’re making you second guess yourself, it’s best to stick with debit cards and leave the Visa student credit card for later. If, however, you are more confident than ever that you can manage a Visa student credit card with ease, you just may be ready for the credit card world.

Max Anderson
http://www.articlesbase.com/finance-articles/are-you-ready-for-a-visa-student-credit-card-282095.html

If you’re anything like most Americans, money is at the root of your New Year’s resolution. Most of us bid goodbye to 2008 with our wallets a bit thinner and our spending habits a bit humbler. Maybe you’ve pledged to cut back on expenses, get out of debt, or start saving for a house or your kids’ college education. Here at DebtStoppers, we’ve got the tools to make 2009 the year you reach those goals.

Let’s start with credit cards—more specifically, credit card debt. I have it, you have it—in fact, the average American carries nearly $10,000 of it. It was a huge factor in last year’s economic meltdown and it’s also the reason most of us struggle to pay our bills.

But don’t take a pair of scissors to your wallet just yet. Credit cards aren’t exactly evil. Well, maybe they are, but they’re somewhat of a necessary evil. If you didn’t use one at all, you wouldn’t be able to build up a credit history. And without a history, lenders wouldn’t trust you enough to loan you the money to buy a car or house or to pay for a college education.

The problem arises, however, when we use credit for everyday purchases. Because plastic doesn’t require cash upfront, it’s tempting to spend a little extra at the grocery store or on gifts for the kids. And it’s hard to say no to credit when the car or heating unit needs repair. Why wait until you get the money, right?

But unlike cash, check or debit, credit comes with strings attached. Creditors aren’t giving you a waiting period to pay out of the kindness of their hearts. For the “favor” of loaning you money, they want something in return—interest. So that $1,000 flat-screen TV you just put on your card this Christmas? At 25% interest annually, it will actually cost $1,250 (well, probably more because most interest rates are not flat, but compounding—but that’s another story).

Most cardholders get caught up in a vicious cycle. You want to stop spending more than you make, but you’re paying so much in interest that you can’t afford to make necessary purchases without your card—therefore you continue to rack up debt.

So what can you do to break free? Start paying down your debt—it will be much easier to wean yourself off the plastic if you do. I can’t guarantee the process will be painless, but it can be done. And it will save you money and stress in the long run.

Best yet, you don’t have to do it alone. We can walk you through it. Visit our blog for a wealth of tips and advice. Consider signing up for a free one-on-one debt analysis with one of our debt relief attorneys. Or get a crash course in money matters at our free community workshops, Jan. 15 in Chicago or Jan. 22 in Atlanta, where you’ll also be eligible to win a laptop or GPS system (don’t worry–when these fill up, we’ll schedule more). This can be the year you free yourself from debt. Let’s get the ball rolling.

Debt Stoppers
http://www.articlesbase.com/personal-finance-articles/make-2009-the-year-of-financial-freedom-715905.html

Compare the best credit cards for people with bad credit at www.securedcreditcardlist.com.  As we all know, responsible credit card use can lead to a lifetime of low-interest rate loan opportunities.  Notwithstanding a less than perfect credit record or minimal income, credit card issuers often give consumers a second chance to repair their credit history through the use of a secured credit card or a pre-paid credit card.  This is an opportunity that should not be taken lightly, particularly in light of the enduring credit crisis which has made it difficult for many working people with good credit records to receive new credit cards, auto loans and mortgages.  

Secured credit cards issued by Bank of America, Capital One and New Millenium are specifically designed for applicants with imperfect credit histories.  Some of the features offered by these credit card issuers include:

•           Credit Lines available from 0 to ,000

•           Set your own credit limit

•           Build or reestablish your credit

•           Save with a low non-intro variable APR, currently 14.9%

•           Exclusive savings on featured deals

•           Know you are protected with fraud liability if your card is ever lost or stolen

During continuing economic instability, uncertainty in the stock market, illiquidity in the credit markets and the softening real estate market, one thing remains constant – consumers with damaged credit records should be given an opportunity to re-build their credit.  Responsibility, however, is essential.  If you do not have sufficient funds to buy something now, you should consider saving until you can.  Credit cards are most beneficial when you can afford to pay your balance in full every month.  In these turbulent economic times, where credit is getting more difficult to come by, it is important to establish a strong credit profile by establishing credit early and maintaining a consistent payment history.  Credit cards issued by Bank of America, Capital One and New Millenium are tailored for applicants with less than perfect credit. 

http://www.articlesbase.com/credit-articles/apply-online-credit-cards-for-people-with-bad-credit-662952.html

http://www.articlesbase.com/credit-articles/apply-online-secured-credit-cards-for-consumers-with-imperfect-credit-661368.html

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