Recent comments made by White House spokesperson Dana Perino at a press conference today indicate that the captive finance companies of the domestic automakers could apply for aid from the financial rescue package passed by Congress on October 3rd.
Press Briefing Discussion
Here at Auto Credit Express, we're concerned, as are most consumers out there, by the recent news from GMAC that the lender would only accept credit applications with a 700 FICO score or better.
With this in mind, it was interesting to note that during today's White House press briefing, press secretary Dana Perino brought up the possibility of additional aid – this time for the captive finance arms of the auto companies – that would be in addition to the $25 billion already earmarked for the auto industry.
When asked about the additional support, Ms. Perino began by discussing the current state of affairs in Detroit: “I think it's clear that the automakers are dealing with a very serious situation, they have been for some time.” No news there, really, but then she went on to state, “One thing is that automakers do have financing arms -- many of them do -- and it's possible that some of those financing arms could be a part of the rescue package -- the TARP (Troubled Assist Relief Program), as they call it at the Treasury Department. So that's why -- that's one of the reasons Treasury has been in contact with them (the automakers).
Infusion of capital could help with car loans
While the $25 billion Federal Aid package was designed to help the car manufacturers invest in new technology for more energy-efficient vehicles and the retooling of manufacturing facilities, it had very little to do with vehicle financing.
If, on the other hand, the captive finance companies are able to apply for funds under TARP, it could directly affect the liquidity of the captives, allowing them access to funding and a corresponding increase in the amount of loans they could offer customers. This would give lenders, such as GMAC, the ability to offer loans to a broader spectrum of customers – opening up loans to customers with credit scores below 700 and bringing in more customers to dealers.