GMAC Expands Credit Spectrum of Auto Financing
DETROIT — GMAC Financial Services announced it has resumed auto financing for a broader spectrum of U.S. customers as a result of expanded access to funding as a bank holding company.
The company said it has modified 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.
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 company noted.
Paul Pejza, manager of GM Certified Used Vehicles, said this decision clearly bodes well for sales in the future.
"GMAC is now in a position to again offer their customers attractive financing on GM Certified units, providing our dealers an effective sales tool," he explained to SubPrime Auto Finance News this morning.
"Feedback from our GM Certified dealers indicates the GMAC APR rate support generates increased awareness and showroom traffic, which helps grow sales," he added.
Meanwhile, Mike Stoller, a spokesman for GMAC, recently told SubPrime Auto Finance News, "GMAC is pleased that we will be able to resume auto financing for a broader spectrum of retail customers in the United States."
"By easing our restrictions on our criteria to include retail financing for credit bureau scores of 621 and higher, we have expanded financing opportunities significantly for customers. We are particularly excited by how quickly we have been able to get back into the market and help our customers," he said.
As many have likely already heard, GMAC's application to become a bank holding company was approved by the Federal Reserve Board of Governors on Dec. 24. GMAC also received an investment from the U.S. Treasury Department as part of the Troubled Assets Relief Program.
"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," said GMAC president Bill Muir.
"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 U.S.," he continued.
At this time, GMAC said it 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, according to officials.
"The majority of GMAC's auto financing has been in the prime arena," Muir said. "Therefore, opening access to credit for those with credit bureau 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 U.S. auto industry."