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Ford's debt is more complicated than most of its automotive peers.

Dig a little deeper and the company's debt load is actually far more attractive; you just need to understand it better. There is more to Ford's debt story that needs to be clarified.

People are taking Ford's automotive debt, and adding it to the financial services debt. That's not the way that investors should look at. It's also not the way that the credit rating agencies look at it.…

The reality, Ford is pretty much two companies wrapped into one:

Ford Automotive and Ford Credit. "Ford Automotive" is the iconic car manufacturer. "Ford Credit", in contrast, is a financial services company that helps provide auto loans to buy cars.

Ford managed to hold onto its credit business during the nasty auto crisis from 2008 to 2010. The other main US auto-makers were forced to spin off their auto loans arms. General Motors' finance arm eventually became Ally. Fiat Chrysler, in contrast, sold its arm eventually, becoming TD Auto Finance after Toronto-Dominion Bank purchased it.

Ford, however, held onto Ford Credit. Needless to say, Ford Credit provides people with loans to help buy Ford cars. Ford Credit builds up debt levels. This debt is used to loan out to customers at a higher interest rate. They then repay their debt, as they do Ford Credit keeps the additional interest as profit. And quite some profit.

Should you really worry too unduly about Ford Credit's debt? After all, is this not "good" debt in that Ford gets back in interest more than it pays on that debt? Ford certainly thinks so.

In downturns people buy fewer cars. Fewer people buying means, fewer people taking out auto loans. Yet, those already taken out continue to be repaid (except some defaulters). Consequently, new debt provided by Ford Credit slows, yet outstanding debt will continue to decline. Ford Credit's debt therefore winds down.

Naturally, the opposite occurs during strong markets for car sales. More sales, more auto loans, higher debt taken at Ford Credit. Consequently, you should expect to see Ford Credit growing debt in strong markets and shrinking debt in weaker ones

The next time you hear about Ford having an extreme amount of debt compared to its competition, or an abnormally high debt-to-equity ratio, pass this on. "Ford Automotive" has more cash than Debt and

"Ford Credit" debt is making money for Ford automotive.$Ford(F)$