Automakers get Bailout, Consumers turn to Installment Loans

The struggling economy is affecting everyone

While automakers look to receive additional funding, consumers are looking to installment loans for aid. In the recession, everyone is suffering. Even huge automakers, despite billions in governmental bailout money, are facing liquidation and bankruptcy. The economy is taking its toll on everyone from industry giants to average taxpayers.

So what are taxpayers doing? Most are looking for money where ever they can find it. That means budgeting carefully, looking to family and friends for loans, installment loans and downsizing. A simple search online for “budgets” brings up a crop of new software aimed at helping Americans budget themselves wisely in the recession. Friends and family are bonding together, trying to share funds so each one is able to cover bills. Installment loan companies are flourishing by creating simple, short-term loans for those who qualify. Many people are downsizing their homes, cars and lifestyles in response to the market.

Automakers looking for help

General Motors is estimated to receive $5 billion in additional federal loans from the government and Chrysler LLC could receive $500 million. Despite the two already receiving $13.4 billion and $4 billion respectively, more money is coming to them, provided they meet the governments’ strict requirement date for restructuring.

The government’s auto task force is giving GM until June 1st to meet their demands and giving Chrysler until April 30th. Both auto giants have already submitted their plans, only to be rejected by the task force. The new deadline represents a finality because if they are unable to restructure adequately Chrysler may have to find a business partner or liquidate and GM may need to restructure under bankruptcy law.

Both companies assessed that they need additional funds to make it through the year. GM CEO Fritz Henderson stated that $4.6 billion will be needed for the company to function in Q2. Despite already receiving $4 billion in government support already, GM is typical of the car industry. They have debt and infrastructure costs that are too high to manage. Without enormous governmental aid, there is no other solution for the company other than bankruptcy protection.

More auto funds

Just as consumers look to installment loans, auto manufacturers are looking to another government auto-bailout. The Treasury department estimates that an additional $1.25 billion will be spent to guarantee warranties for people who buy Chrysler and GM cars during their restructuring. The purpose of this additional money is to give consumers confidence that their warranties are valid and will be fulfilled should they need aid. Part of the plan is to restore the confidence of the American public, so they start buying as they would have in the past. This is to ultimately refuel the economy and get the auto industry back on track.

The recession does not discriminate

In the end, that leaves the American economy struggling to stay afloat. Huge corporations are looking for government aid in continuing to manage. Individuals are looking to cutting-corners, installment loans, and downsizing to help them through the recession. The ubiquitous nature of the recession is evident when seeing how it affects everyone. Billion dollar corporations and mid-income taxpayers are all scrambling to find ways of managing. As the economy levels itself out, people are left to watch the dust settle and wonder where they will be a year from now.