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GMAC to Resume Financing With Relaxed Credit Restrictions
30 December 2008
On the heels of its approval as a bank holding company (earlier post) and a $5-billion infusion from the US Treasury (earlier post), GMAC Financial Services will immediately resume auto financing for a broader spectrum of US customers as a result of the expanded access to funding as a bank holding company.
The company will modify its credit criteria to include retail financing for customers with a credit bureau score of 621 or above, a significant expansion of credit compared to the 700 minimum score put in place two months ago.
At this time, GMAC will not finance higher risk transactions characterized by a credit bureau score of 620 or below. The company will utilize both GMAC Bank and funding from other sources to resume its traditional spectrum of prime-based credit, appropriately pricing for risk and requiring down payments where necessary.
GMAC’s expanded financing policy and improved retail financing rates will apply to both new and certified used vehicles. Dealer wholesale financing remains a priority for GMAC, and is unchanged.
The actions of the federal government to support GMAC are having an immediate and meaningful effect on our ability to provide credit to automotive customers. We will continue to employ responsible credit standards, but will be able to relax the constraints we put in place a few months ago due to the credit crisis. We will immediately put our renewed access to capital to use to facilitate the purchase of cars and trucks in the US.
The majority of GMAC’s auto financing has been in the prime arena. Therefore, opening access to credit for those with CB scores of 621 or better will allow us to return to more normal levels of financing volume, and should help in efforts to stabilize the US auto industry.
—GMAC President Bill Muir
December 30, 2008 in Brief | Permalink | Comments (5) | TrackBack (0)
Comments
Posted by: HarveyD | December 30, 2008 at 12:40 PM
"...current financial bubble and make it burst sooner and louder?"
HarveyD, might I suggest reading a newspaper or watching a news report at least one time every 3 months.
Posted by: Patrick | December 30, 2008 at 05:36 PM
Patrick:
The bubble is still floating or being kept afloat with bailouts. Keep watching and listening (every 3 months if you prefer) for another 48 to 96 months and you may hear much louder noises.
This is just the beginning of a prolonged foreseable readjustment period.
Sorry to disappoint you. People and newscasters who tell you that everything will be fixed soon and it will be business as usual with a few more $$$ trillions bailouts may not be around to admit their mistakes.
We are in it for up to 10 years or so. Many world leaders may have changed before the next golden age comes around.
Posted by: HarveyD | December 30, 2008 at 07:15 PM
Harvey:
All things, both good and bad, happen (and, luckily, end) much faster nowadays, thanks to internet and globalization. I doubt recession will last more than a year.
Generally speaking, it is wise policy to save when times are good, and spend the reserve at rainy day. So, current bailouts are necessary evil. Unfortunately, our politicians undoubtedly will continue to spend like there is no tomorrow when economy will improve, preparing the ground to another bubble and crush…
Posted by: Andrey Levin | December 31, 2008 at 02:02 AM
Andrey:
I hope that your estimate is correct. Anything shorter than 36 months or even 48 months would be an achievement.
Don't forget that the bubble started to burst at the seam almost 18 months ago and that another 18 months to patch it up is a very short time.
An all azmuth multi-Trillion $$ infrastructure program could help to stimulate the world economy with 24 to 48 months.
Simultaneously, a multi-year green energy (geothermals, wind farms +++ etc) coupled with a program to upgrade the national power grid could help within 30 to 60 months.
A program to accellerate the transition from ICE to electrified vehicles could also help within 36+ to 72 months.
Most economic stimulation programs will take time to introduce and cruise to the level required to create more jobs than were lost in the last 18 months.
Posted by: HarveyD | January 02, 2009 at 01:38 PM
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Will expanded easy access to more and more credit pump more pressure into the current financial bubble and make it burst sooner and louder?
Germany tried that approach without much success in the early 1930's
Fundamentals will have to be properly addressed sooner or latter.
Is printing more money and/or giving more and more short term handouts or bailouts the best long term solution?
What is the maximum per capita debt level can a healthy economy sustain? Have we reached it already?