By on April 22, 2014

Ally_Financial

With Ally Financial’s IPO now making the rounds on the New York Stock Exchange, the former financing arm of General Motors has its eyes on taking more of the subprime market, a move benefiting dealers once the last ties to the U.S. federal government have been severed and sold to the stock market.

Automotive News reports Ally is moving forward with plans to lower cost of funds by paying off older high-interest debt, as well as issuing the IPO that would allow the U.S. Treasury to sell its remaining 17 percent ownership in the automotive lending company in the near future, having already sold 95 million shares for $2.4 billion through the IPO early this month.

In turn, Ally would be able to use bank deposits to fund “near prime” consumers — those with credit scores between 620 and 660 — in financing new car leases and purchases. Currently, the lender holds 11 percent of its portfolio in subprime lending, though the percentage was obtained through more expensive funding sources.

Once bank deposits are made available, however, the increased lineup of options for Ally would provide more flexibility for gaining more share in the subprime market, a strategy CEO Michael Carpenter says is “dealer-centric.”

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2 Comments on “Ally IPO Brings New Subprime Lending Options To The Table...”


  • avatar

    Is there a way they can offer me 2 million year financing on a Bugatti Veyron Super Sport?

    • 0 avatar
      stuki

      Now that’s how value is created in America these days: Lend to anyone, book everything as money good, use the “earnings” to buy back shares. Then, when the bill comes due, pass it to taxpayers. Who have been told we “need” the financial sector…. And have spent enough time in publicly funded indoctrination institutions to actually believe the drivel…

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