The Vanilla Phrase that Should Change Your Thinking

Written by
Peter Dunn

You never know what to expect when you read the Wall Street Journal these days. Generally speaking, you will most likely leave the text feeling worse about the economy. I generally try to avoid financial news on TV because I find that it is slanted. Therefore, I simply try to get my financial news via newspaper.

Anyway, while reading the Journal this morning I was slapped across the face with reality. The article was about how hundreds of car dealers are going under (specifically GM dealers). Here is the phrase that I read that I just knew was coming.

GMAC LLC, which provides financing for most of the nation's General Motors dealers, recently notified dealers that it was revising terms of inventory credit and interest rates on revolving credit lines. Chrysler Financial took similar steps. Both raised dealership costs.

Uhhhhhhhhh. That's not good. Here is what this means. Creditors are changing credit terms on the fly. And if GMAC is willing to change the terms on their GM dealers, then your creditors will certainly change your terms.

The bottom line: pay down credit at a breakneck pace over the next few months. If your debt ratio is out of line, then your creditors can change your credit terms. Feel free to email me if you want further details of how this could affect you: askpete@petetheplanner.com

Don't guess. Know.

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