Tight credit causes GM captive lender to further restrict lending to individuals with a FICO score of 700 or more.
Lender cites credit market instability
While both Volkswagen Credit and Toyota Motor Credit have loosened the purse strings – relatively speaking – the current credit crisis has caused GMAC to yank the purse away from dealers, making it harder for all GM dealers to get customers financed. According to what we can tell here at Auto Credit Express, this would also include many customers with situational credit issues; that is, customers whose credit has suffered due to current economic conditions.
That being said, here is the press release from GMAC:
GMAC Financial Services Statement on Automotive Finance Purchase Policy
DETROIT, Oct. 13 -- GMAC Financial Services today implemented a more conservative purchase policy for consumer auto financing in the U.S. as a result of the lack of stability in the global capital and credit markets. The changes include limiting purchases to contracts with a credit score of 700 or above. Additionally, the company will restrict contracts with higher advance rates and longer terms. Last week GMAC also increased by 75 basis points the rate it charges dealers for providing non-incentivized consumer auto financing.
These changes in pricing and underwriting are related to the current market environment, which has reduced access to funds and increased the cost of funds. The company currently expects these actions to remain in place until the credit markets stabilize and accessibility improves.
GMAC's wholesale auto finance business is unchanged by the actions announced today.