By on November 12, 2013

Renaissance Center

Best known for underwriting public radio programming such as “All Things Considered” and “Marketplace,” Ally Financial — formerly known as GMAC until the subprime market collapse kicked off the Great Recession — has decided to go for the gold in the used car and leasing markets, citing “irrational” pricing found in the superprime mortgage loan sector for its move from the latter toward the former.

The other reason? Better returns on investment; according to Ally CFO Chris Halmy, leasing a vehicle takes more expertise than conducting a low-risk, low-return superprime loan. Thus, Ally can gain more from financing a lease or used car purchase while still remaining inside a low-risk bubble.

As for its current lease and used car financing operations, 29 percent of Ally’s total originations came from leases while 27 percent came from the used car lot in the third quarter of 2013, up 2 and 3 percent respectively from the same time last year. Total originations for the third quarter netted the organiztion $9.6 billion, unchanged from Q3 2012.

Regarding future plans, Ally is planning to buyout the United State Treasury, which currently holds 74 percent of Ally. There are also plans for an IPO, but when is still a matter to be discussed behind closed doors.

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8 Comments on “Ally Exits Superprime Loans, Enters Used Car Market...”

  • avatar

    If only the people now running Ally had been hired by GM before they put GMAC into the subprime mortgage business. GMAC might have made GM enough money to stay out of bankruptcy.

  • avatar

    “Regarding future plans, Ally is planning to buy out the US Treasury,”

    There’s that much money in used car loans, huh?

  • avatar
    Domestic Hearse

    The former GMAC and later Ally had the luxury of being first the GM dealers’ then the Chrysler dealers’ finance arm. GM now has GM Financial (formerly Americredit) and Chrysler Group LLC now has Chrysler Capital (Santander USA).

    Both GM Financial and Chrysler Capital are getting the lion’s share of the non-prime new car paper at their respective OEMs, so there’s not many other options open to Ally other than to carve out a new niche in the car finance universe.

  • avatar

    these bankster/government bedfellows are no longer short sheeting. no matter, there are plenty of other fish willing to bite.

  • avatar

    BMW is currently running a 0.9% loan promotion.

    They are also running a Certified Previously Owned (CPO) “Holiday Promotion” on the 2011 3-series where you will get up to $500 or $1000 towards the first 1 or 2 loan payments, depending on model.

    Do the math. The interest rate is actually a NEGATIVE number as the Finance Charge ends up paying you to take out a loan. In effect, BMW PAYS YOU to finance the car with them…

  • avatar

    Nice shot of the ONLY buildings still standing in downtown Detroit? Maybe yous shoulda moved to Oshawa.

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