When does Ford Credit recognize bad debt expense ...
When does Ford Credit recognize bad debt expense associated with a new car loan?
Every individual has a credit score, which is an approximate measure of the risk of loan default to potential lenders. Credit scores range from about 300 ? 850, with 850 being the best credit score possible. This credit score is a combination of several categories of history about the individual, including length of credit history, amounts owed, payment history, types of credit in use, and new credit. A general rule of thumb is that a "good" credit score is above approximately 700.
In 2013, buyers with credit scores of less than 500 (poor credit risks) made up more than 27 percent of loans for new vehicles (see Bloomberg article entitled "Good Job is Good Enough as Subprime Car Buyers Lift Sales"). This 27 percent compares with 25 percent in 2012 and 18 percent in 2009.
Questions 1. Why do you think that lenders are making car loans to people with lower credit scores? 2. What does the term "default" mean as it relates to loans 3. Assume that Ford Credit makes a car loan on a new Ford Fusion sold to a customer in 2013.
Assume that this borrower defaults on the loan in 2015. When will Ford Credit recognize the bad debt expense associated with this car sale/loan? Explain. 4. If Ford Credit is extending credit to borrowers with lower credit scores, what would you expect to see happen to Ford Credit's allowance for bad debts balance (i.e., would it increase or decrease)? Why?
Page 1, Copyright ? 2014 by Dr. Wendy Tietz, This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License .
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related download
- the impact of credit scoring on consumer lending
- chapter 10 credit analysis usda rural development
- bad credit car loans car loans search
- discrimination when buying a car
- credit getting
- questions answers about subprime lending
- fha sf handbook excerpts hud
- section c borrower credit analysis overview
- building a better credit report consumer information
- what is the cost of poor credit urban institute
Related searches
- does ford offer 0 financing
- when does school start in nyc 2019
- when does the flu season end 2019
- when does flu season end 2019
- does ford have 0 financing
- when good things happen to bad people
- ford credit requirements credit score
- when does financial aid stop
- credit cards bad credit instant approval
- when is ford earnings
- bad debt home loans
- credit card bad credit no deposit