GMAC Reinstates 0% Loans And Loosens Credit Requirements

It didn't take long for the government bailout of GMAC to filter down to the car lot.

General Motors, which has long relied on GMAC to provide financing for many of its customers, said Tuesday it would offer zero-percent loans on a handful of vehicles and below-market rates on financing for several other models.

The announcement came the day after the federal government said it would give $5 billion in aid to GMAC, which had virtually ceased making auto loans as a crushing debt load threatened to push it into insolvency.

With the rescue money on the way, GMAC said it would loosen its credit standards so that more borrowers could qualify. Credit scores of above 620 would be accepted, less than then 700 or above that had been required. All of which is welcome news to GM dealers, who are battling the worst sales slump in the U.S. auto market since the early 1980s.

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mini22 - 12/31/2008 12:24:13 PM

+2 Boost

No-They are not giving out subprime loans. Rather they are going back to the market just above that. The reality is that is where the bulk of the population is that buy cars(620 and above). Unless those people are able to finance cars the auto makers will be back in the same situation that the've been in and the industry will tank.Requiring a credit score of 720 or above cuts out 80% of the buying public.

Agent009 - 12/31/2008 1:06:36 PM

+2 Boost

correct, they wasted no time in taking that money and putting it to use.

monkeyrun - 12/31/2008 3:04:02 PM

+2 Boost

"Loosens Credit Requirements"

I don't know, but it sounds like a recipe for disaster.

veyron1001 - 1/2/2009 7:22:42 PM

+1 Boost

Isnt that what caused this economic mess in the first place?

neutral - 1/4/2009 2:07:56 AM

+1 Boost

no veyron1001, morons like you caused this mess in the first place.

If more simpletons like you could afford to have brains, then we would all be fine.

mini22 - 12/31/2008 4:43:37 PM

+1 Boost

The credit market segment (at least for car loans) has always been about 620 and above. It was only until 2 months ago that GMAC started requiring 720 and above. That is not a workable model for most car loans and is the straw that broke the camel's back with the big 3. 620 loans are not sub prime loans in the auto industry. There will always be some who cannot pay.However this is where the buying market is credit wise.

neutral - 1/1/2009 1:50:32 PM

+1 Boost

Well I'll be damned.....

GMAC, the finance arm (or what used to be) of the big-evil General Motors gets approved as a bank, and unlike the generous and responsible banks on Wall St, is actually lending money.

Looks like maybe that 700billion should have gone to institutions like GMAC which are actively involved with consumer spending vs. criminals on Wall St. who got us all into this mess and who took their TARP money and ran.

neutral - 1/1/2009 1:52:00 PM

0 Boost

Also,

Happy New Year everyone, go watch Chicago vs. Detroit at Wrigley Field!!

(its not everyday you get to see hockey played outdoors!!!)

RaulT - 1/2/2009 12:43:28 PM

+1 Boost

I think this was a good step. I sell VWs and I can tell you I had a customer with a score of 600 on the dot. He made a lot of money and had a lot of open accounts. But, he paid everything on time. So, he being a 600 might not have qualified for a GMAC loan but he truely could afford it.

I think it should all be taken on a case by case basis. you can't just lump everyone in one basket.

Veeracer - 1/2/2009 5:45:36 PM

+1 Boost

Let's face it. If you have bad credit, i.e. a 580 score or below, you either have debt out the yin yang or are a slow pay credit risk. Either way, the last thing your stupid a$$ should be doing is buying a brand new car...especially some uber depreciating GM POS.
GMAC used to be the best deal in town for getting a 125% second mortgage. This way that same idiot that just drove off the lot with his new Tahoe (now worth $5000 less than he paid) can owe over $312,000 on his $250,000 house.

hk4site - 1/3/2009 12:06:09 PM

+1 Boost

Isn't this what got us into this jam in the first place?

Veeracer - 1/4/2009 5:00:50 PM

+1 Boost

Pretty much, yeah. I got out of the mortgage industry shortly after lenders started doing "stated income" loans. You say you make $75K per year and have a good credit score? No problem, we'll take your word for it. Luckily, stated income loans have gone bye-bye.

ForumPost128 - 8/23/2010 3:46:02 PM

+1 Boost

I have a 645 credit score ..

I've NEVER missed a payment in my life, had MANY loans, credit cards, homes, etc... My credit score was a 760+ until all my credit card companies dropped my limits taking me from a 20% debt to available debt to a 95+% debt to available debt.

If I buy a car, I WON'T have it repo'd, so I'm glad to see GMAC opening up credit requirements.