Financial impact of defaulted car loans in automotive industry essay

Unexpected health care Bill Fuel price hike There are factors that are considered the reason of a car loans default. Car loan defaults may affect the non-banking institution by means of the increase of repossessed cars or second hand cars. Banking Institutions can be affected financially because default car loans means the borrower can no longer pay the loan because of certain reasons.

Financial impact of defaulted car loans in automotive industry essay

Share The passage into U. It also marked the fourth time in that the government interceded to prevent the ruin of a private enterprise or the entire financial sector. The savings and loan bailout of The collapse of Bear Stearns, an investment bank and brokerage firm American International Group AIGan insurance colossus with global reach Freddie Mac and Fannie Mae, two government-backed mortgage lenders Bank Rescue of Officially called the Emergency Economic Stabilization Act ofthis bailout bill surpassed any previous government bailout by hundreds of billions of dollars.

The principal mandate of the legislation was to authorize the U. Treasury to buy risky and nonperforming debt from various lending institutions. These debts would include: With the Treasury's purchase of a bank's or mortgage lender's bad debtthe resulting cash infusion will restore liquidity — and hopefully, confidence — to the banking system.

Lending between banks and to consumers and business ventures is then expected to resume, thus lubricating the wheels of the U. This economy depends heavily on lending to finance many expenditures of the business community, including: The Treasury will also print additional currency, in an amount not yet determined, to help cover costs.

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For more on this, read Money Market: If the amount of the currency printed is not excessive - a term without precise definition - inflation should theoretically not result. Taxes for both individuals and businesses may eventually have to be raised to service pay the interest on this massive new debt taken on by the government.

A restructured tax code for personal, corporate, capital gains and other taxes may also be required to close loopholes and increase revenues.

The key federal interest rate is also expected to remain low, or may be cut even further, to encourage a favorable business environment, which theoretically will also help the economy.

Read more about how the federal interest rate can help boost the economy in The Federal Reserve's Fight Against Recession. Finally, the news of the passage of the rescue bill was expected to boost consumer confidence — an individual's propensity to spend — and thus further stimulate the economy.

The Great Depression Probably the best-known economic catastrophe in recent history, the Great Depression is the name given to the prolonged period of economic decline and stagnation that followed in the wake of the stock market crash of With the election to the U. Roosevelt ina number of historically significant, precedent-setting government bailouts and rescue programs were enacted, which were designed to relieve the economic woes that afflicted the country's people and businesses.

Eventually, countless Americans who had lost their jobs lost their homes as well, and the homeless population of the country, especially in urban areas, grew accordingly.

To solve this growing problem, The Home Owners' Loan Corporation was created by the government, one of the principal government bailouts of the Depression era.

Financial impact of defaulted car loans in automotive industry essay

The newly-created government agency purchased defaulted mortgages from banks and refinanced them at lower rates. About one million homeowners benefited from the lower fixed rates on their refinanced mortgages, usually written for a year term, although upwards of two million had applied for help.

Because there was no secondary market for packaged mortgages, the government held the mortgages until they were paid off.

A variety of other government-financed programs were created to solve the severe national economic distress, which by had affected almost every sector of the economy. While these federal initiatives were not bailouts, strictly speaking, they provided the money and government support to create tens of thousands of new jobs, principally in public works.

Some of the projects accomplished under the government programs were as follows: The Hoover Dam was built. New post office buildings were constructed around the country. Writers were put to work writing state guidebooks. Visual artists were employed to paint murals in the new post offices.

Old roads and bridges were repaired; new roads and bridges were built where needed. Farmers received government price supports and subsidies for their produce and livestock.

With steady income, the re-employed millions began purchasing again, and the economy began to lurch forward in fits and starts, but it was not yet back to previous levels of vitality. Read about the bodies protecting your bank deposits in Bank Failure: Will Your Assets Be Protected?

Flush with funds, numerous savings and loan institutions ventured into commercial real estate.In January , the federal government created the Automotive Industry Finance Program. It gave GM and Chrysler the operating cash they needed to survive. It made GMAC auto loans more available for .

Published: Thu, 20 Apr The impact of global crisis towards Malaysian automobile industry is one of the good researches that we should to investigate. Malaysian automobile industry is one of industry that contributes to Malaysian GDP, Malaysian development and push industrialization.

Financial Impact of Defaulted Car Loans in Automotive Industry Essay CHAPTER I The Problem and Its Background Introduction Car loan is one of the consumer’s credits that are applied for personal use of a . financial Essay 1. Interest both of the income and the price of assets of the financial the interest rate goes higher,the amount of financial instruments’loan and their acquiring funds will get torosgazete.comile,the price of stock and bonds that any financial instruments had owned will go torosgazete.comsely,the sentence.

The Crisis Unfolds.

This paper explores how the defaulted consumer car loan affects the Philippines Automotive Industry. Base on Esquire Financing Incorporation, they seek the five C’s of credit from their borrowers which are character, capacity, capital, conditions and collateral.


The financial crisis of –, also known as the global financial crisis and the financial crisis, is considered by many economists to have been the worst financial crisis .

What are the Consequences of Defaulting on an Auto Loan? -