GMAC Financing problems

[rolnslo]

For those that haven't heard yet and are planning on financing your new Camaro, better make sure that credit score is up if you plan on using GMAC. Luckily most dealers have an array of options for financing so you should still be able to get a loan when your car shows up.

GMAC said yesterday it's granting financing only to buyers with scores of at least 700, who represent about 58 percent of U.S. consumers. The Detroit-based company, now controlled by Cerberus Capital Management LP, provided 43 percent of GM's second-quarter auto loans.

http://www.bloomberg.com/apps/news?p...N5x6M&refer=us

[trm0002]

Originally Posted by rolnslo

For those that haven't heard yet and are planning on financing your new Camaro, better make sure that credit score is up if you plan on using GMAC. Luckily most dealers have an array of options for financing so you should still be able to get a loan when your car shows up.



http://www.bloomberg.com/apps/news?p...N5x6M&refer=us

That's fine. Then we, who are above that level, should get a preferred interest rate since they won't be financing deadbeats. They can't raise the credit score requirement and expect that those people who "still make it" can't find cheap financing elsewhere. The only reason I financed my GTO with GMAC was because they gave me $1500 credit to do it. Other than that, my local banks could have met and mostly beat their overall package. The $1500 credit really only saved me $500 over the course of the loan compared to what I could have got local; but $500 is $500.

[franknbeans]

Adding to the gloomy economic atmosphere, GMAC, General Motors' consumer financial arm announced on Monday that is implementing a tighter policy for auto loans. The changes include limiting purchases to vehicle buyers with a credit score of 700 or above while the company will also restrict contracts with higher advance rates and longer terms. GMAC officials attributed the more conservative purchase policy for consumer auto loans to the lack of stability in the global capital and credit markets.


"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," said GMAC in an official statement.


Notably, last week GMAC also raised by 0.75 percentage points the rate it charges dealers for providing loans to consumers for vehicles that aren't part of any special incentive programs.

[franknbeans]

thanks for the move. . . didn't see this one.

[Sierra]

Originally Posted by trm0002

That's fine. Then we, who are above that level, should get a preferred interest rate since they won't be financing deadbeats. They can't raise the credit score requirement and expect that those people who "still make it" can't find cheap financing elsewhere. The only reason I financed my GTO with GMAC was because they gave me $1500 credit to do it. Other than that, my local banks could have met and mostly beat their overall package. The $1500 credit really only saved me $500 over the course of the loan compared to what I could have got local; but $500 is $500.

Not all people with credit issues are dead beats. Some may have had medical issues that caused some reprocussions. Also if you had a GMAC loan before and paid on time that helps.

[trm0002]

Originally Posted by Sierra

Not all people with credit issues are dead beats. Some may have had medical issues that caused some reprocussions. Also if you had a GMAC loan before and paid on time that helps.

You're right- that was a little shortsighted. To those with actual "extenuating circumstances" I apologize. I guess I'm just so caught up in the economic mess where people are blaming the lending institutions for making "bad" loans and exonerating the "poor people who were taken advantage of". They deserve just as much blame as the lenders IMO and now it looks like we're going to bail them out. Who's gonna bail me out? I pay my bills so I get nothing but a pat on the back? BS

-end rant

[boot879]

New here so don't hate on me for being a little negative... but when it comes to credit I for one and 100% pleased to hear that companies are slamming the doors closed on "easy" loans and sub-prime loans. $30,000... heck $22,000 cars... new from the factory are luxury items. If you can't afford it... you shouldn't have it. When my credit was bad I wasn't able to get a $300 credit card... so I fixed my credit, paid my bills and now I don't have to sweat my bills.

If you are squeezing the budget looking for the cash to buy a base Camaro... might be time to rethink a NEW car.

[odie23]

Words to the wise, new car fever is real. When it comes to money, lenders/dealers are not your friend, its ALL about money, YOUR hard earned money. Learn how to buy a car.

[karr1008]

Bottom line. If you do your math and can't afford it then don't buy anything. Period.
Save and later put a hefty nice down payment and make your monthly affordable. That's my way anyways.

[rmyers]

Or as Dave Ramsey says, your FICO score can be your "I LOVE DEBT" score. Since the only way it stays high is if you stay in debt, paying off debt.

[Beyond Limits]

It is a risk control move. More then likely it will change but GMAC is being threatened with having their credit ratings lowered which will make it much more difficult for them to borrow money to lend out which in turn means they have to raise the interest rates they charge to the consumers. Now if they improve the quality of the debt instruments they are financing (that would be you the borrower and the car you would like to finance) then the quality of debt they have on their books is of a higher quality which means that it is easier for them to sell the debt to investment banks and to borrow funds from other banks to continue to lend.

Remember, GMAC does not actually hold all of the loans they underwrite. They originate the loans and then like all other loan origination entities they bundle them up and sell them to investment banks (very similar to what the mortgage lenders do). The higher the FICO score the lower risk the loan is seen as and the lower risk the bundle becomes. Because of the de-leveraging that the market is going through right now no investment bank is willing to purchase any debt that is perceived as high risk. So it a way it is actually very smart of GMAC to be doing this, and it would not surprise me if you start seeing a lot more places do stuff like this.

[EllwynX]

Originally Posted by boot879

New here so don't hate on me for being a little negative... but when it comes to credit I for one and 100% pleased to hear that companies are slamming the doors closed on "easy" loans and sub-prime loans. $30,000... heck $22,000 cars... new from the factory are luxury items. If you can't afford it... you shouldn't have it. When my credit was bad I wasn't able to get a $300 credit card... so I fixed my credit, paid my bills and now I don't have to sweat my bills.

If you are squeezing the budget looking for the cash to buy a base Camaro... might be time to rethink a NEW car.

I agree. Lenders should look at a prospective customer's current credit information and refuse to finance them if it's obvious they can't afford to take on more.

If they're taking home $3000 a month, have $2000+ a month between Cards, loans and Mortgage, plus other monthly bills (electric, phone, cable, insurance, gas, food, etc) then you should NOT be getting a $400 or $500+ car loan payment.

[Nexus6]

i found this on jalopnik today and thought i would give people the heads up.

http://jalopnik.com/5062876/gmac-now...r-new-car-loan


The Financiapocalypse continues. We just received a copy of an e-mail that went out at GMAC, the lending arm jointly owned by GM and Cerberus, from Barbara Stokel, GMAC's EVP of North American Operations. Here's the most salient detail: you'll now need a minimum 700 credit bureau score to get a car loan at dealer invoice or below from GMAC. The full e-mail is below the jump to explain that news as well as the news they'll be restricting approval of contract terms beyond 60 months unless a buyer qualifies for GM-supported 72-month incentives. So what does this means to you? Well, unless you've got above average credit, it's going to become much more difficult to buy a new car. Frankly, that's probably a good thing for consumers. It's probably a bad thing for GM sales numbers.

GMAC Leaders and NAO Team:

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

There are other places to finance through so dont panic

[camaro5]

The restriction would rule out one out of four new car loans, according to one recent report.

Dealers say they may have trouble finding alternative lenders if they funnel all their best contracts to GMAC.

"This is scary," said Jerry Seiner, president of Jerry Seiner Dealerships in Salt Lake City. "Who is going to step in and buy these contracts?"