GMAC Limiting Car Loans Only To Applicants With Scores Above 700

In light of the disruption in the credit markets, GMAC NAO is announcing a temporary, more conservative purchase policy for retail auto contracts in the United States. In the short term, we will limit auto contracts to those consumers who have a minimum 700 credit bureau score, with an advance rate equal to or less than dealer invoice. This means that consumers will be required to make a down payment. In addition, we will restrict approval of contract terms beyond 60 months, except for those customers qualifying for GM-supported 72-month incentives currently advertised.

These are extraordinary times, and we must take these prudent steps to focus our resources on high quality retail contracts and critical areas such as dealer wholesale financing, until the credit markets are stabilized. To assist dealers, GM has enhanced its retail incentive programs in October to utilize more cash incentives. GM and GMAC will continue to work collaboratively through these challenging financial market conditions.

Barbara Stokel

Executive Vice President, North American Operations

TauronB2G - 10/14/2008 9:03:31 AM

+6 Boost

Bad move. They are already having problems selling cars, no in the face of a credit crunch they are going to further limit the people who can qualify. I understand where they are coming from but they are in the business of selling cars and you cannot sell cars on end end while tightening the credit rules on the other.
T

Agent009 - 10/14/2008 9:41:08 AM

+2 Boost

They have no choice. The Regional GMAC Office is in my building. They are having record defaults on loans from when they gave anyone with a pulse a loan. So the only way to cut back is limit the losses and let the banks (if any) to pick up the slack.

I you are sub prime it now looks like your only alternative is a Schwinn 3 speed.

gooch - 10/14/2008 11:02:54 AM

+2 Boost

Wrong, 009. There are plenty of places that cater to people with bad credit. There are still alternatives for people with bad credit to buy new or late-model used cars. In fact, these places will probably see an upswing in business as mainline dealerships are affected by moves such as GMAC's.

GMAC and other credit organizations are going to have to look at doing something else, because the financial crisis is going to result in a lot of people with good or decent credit seeing their scores tumble as job losses mount and people dip into their retirement accounts to stay afloat, default on loans or declare bankruptcy.

jeffy210 - 10/14/2008 9:25:37 AM

+1 Boost

Good move. Part of the problem they are facing is writing off losses from people who cannot pay on their cars. This will help limit their losses on that end. Yes the lack of sales overall needs to be addressed, but what good is it when you can't collect on the money.

snatchandgrab - 10/14/2008 1:10:09 PM

+2 Boost

Credit has nothing to do w/ a lot of foreclosures/repossessions. People lost jobs and they can no longer afford to pay for the cars. I'm not in that situation, but my co. has layed off 12,000 people in the last 4 years. I'm still in contact w/ some of those people and after their severance ran out, they still can't find jobs so a lot of them lost their homes and cars, because the ones that could find jobs couldn't find jobs that paid anything near what they were making w/ our co.

silver1 - 10/14/2008 3:20:29 PM

0 Boost

Bad Move...

People thats smart enough to keep a score 700 or above is also smart enough not to get a American Car....

Suzn - 10/14/2008 6:42:11 PM

+1 Boost

All banks including sub-prime banks have cut back on their lending range. This is another example of it. The difference is that the manufacturers generally catered to ALL demographics and not just prime customers. GMAC is making the decision first because GMAC also issued mortgages and is hurting the most in regards to manufacturers. ALL banks, ALL manufacturers, even foreign manufacturers have and will even more tighten their belts. This is not as cut and dry as you all are trying to make it seem. There is not ONE thing that can be pin pointed as the "reason" banks are turning customers away. It is industry wide. Doesn't favor foreign or domestic models.

DetectiveBA - 10/14/2008 7:16:31 PM

+2 Boost

Will GMAC accept my Super Mario Bros. score? It’s currently at 12,581,215,519,126…..

veyron1001 - 10/14/2008 11:54:16 PM

+2 Boost

So that is like 10 people that can be approved?

09CTSVforMe - 10/15/2008 8:54:38 AM

+1 Boost

What a concept. Give credit to responsible people who will repay the loan.

Genius.

Whelan - 10/15/2008 11:11:44 AM

+1 Boost

Well no worries here, since I am well above that #. People should be smarter with their credit, not run up CC bills and pay loans that they can afford.

It is the reason we got into this mess was from people not affording things. Better to stop the leak from the point of origin than simply write off everyone's debt as a big oops!.