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Their financing makes money on the differential between the rate they pay on demand notes and the rate they lend to car buyers. Anyone (well, US Persons at lea

Their financing makes money on the differential between the rate they pay on demand notes and the rate they lend to car buyers. Anyone (well, US Persons at least) can buy the demand notes [1], which are currently paying 4.75%. So as long as they are lending at an average rate above 4.75% after defaults and other problems I guess they are in a good position. But they can also move money around internally, I suppose, to make lower rates possible. [1] https://www.ford.com/finance/investor-center/ford-interest-advantage/ https://www.ford.com/finance/investor-center/ford-interest-a...

Clubber 4y ago
I've heard people opine that motor companies: Ford, GM, Harley Davidson, etc. aren't really motor companies anymore, they are finance companies and just use the vehicle as a means to get the financing paper. They are obviously both, but it would explain why the quality of US vehicles keeps deteriorating since around 2007 or so.
- panopticon 4y ago
  > it would explain why the quality of US vehicles keeps deteriorating since around 2007 or so I hear this meme a lot but is it actually true? By most benchmarks cars from the last 10 years are more reliable than those from two decades ago.
  - Clubber 4y ago
    It is in my experience. I used to only buy US cars until I had a brand new 2017 GM vehicle have transmission issues within 6 months of purchase. This was to replace a 2013 GM vehicle that I was having trouble with. I took the 2017 to the dealer and they fixed it for another 6 months, then the issue came back. I took it to my personal mechanic and he said I should get rid of it, so I did. GM trucks have transmission issues. Look up the "Chevy shake," for another example. I don't know about Ford, so they might still be ok, or at least better than GM. I don't want to pay $40K+ to find out though. I expect to be able to drive vehicles without major issues for about 10 years. I've done this in the past with GM vehicles, but after 2007, the two I owned had significant issues all the ones I purchased prior did not. I put significantly less than 10k miles a year on my vehicles.
- brewdad 4y ago
  This has been true since well before 2007. GMAC (now Ally Bank) was almost single-handedly keeping General Motors afloat in the decade prior to the financial crisis. It certainly wasn't the quality of their vehicles.
- Galacta7 4y ago
  It seems like that's literally true for Ally bank, which started its life as the finance arm of GMAC, and still technically is despite being a full-fledged bank in its own right. I don't think they're owned by General Motors anymore, though.

Clubber 4y ago

I've heard people opine that motor companies: Ford, GM, Harley Davidson, etc. aren't really motor companies anymore, they are finance companies and just use the vehicle as a means to get the financing paper. They are obviously both, but it would explain why the quality of US vehicles keeps deteriorating since around 2007 or so.

panopticon 4y ago
> it would explain why the quality of US vehicles keeps deteriorating since around 2007 or so I hear this meme a lot but is it actually true? By most benchmarks cars from the last 10 years are more reliable than those from two decades ago.
- Clubber 4y ago
  It is in my experience. I used to only buy US cars until I had a brand new 2017 GM vehicle have transmission issues within 6 months of purchase. This was to replace a 2013 GM vehicle that I was having trouble with. I took the 2017 to the dealer and they fixed it for another 6 months, then the issue came back. I took it to my personal mechanic and he said I should get rid of it, so I did. GM trucks have transmission issues. Look up the "Chevy shake," for another example. I don't know about Ford, so they might still be ok, or at least better than GM. I don't want to pay $40K+ to find out though. I expect to be able to drive vehicles without major issues for about 10 years. I've done this in the past with GM vehicles, but after 2007, the two I owned had significant issues all the ones I purchased prior did not. I put significantly less than 10k miles a year on my vehicles.
brewdad 4y ago
This has been true since well before 2007. GMAC (now Ally Bank) was almost single-handedly keeping General Motors afloat in the decade prior to the financial crisis. It certainly wasn't the quality of their vehicles.
Galacta7 4y ago
It seems like that's literally true for Ally bank, which started its life as the finance arm of GMAC, and still technically is despite being a full-fledged bank in its own right. I don't think they're owned by General Motors anymore, though.