GMAC reduces financing for high-risk customers
GMAC reduces financing for high-risk customers
Automotive News | July 29, 2008 - 4:38 pm EST
DETROIT — General Motors dealers will have to put high-risk customers into less expensive vehicles or get higher down payments than in the past, now that GMAC is tightening its financing policies.
Over the past year, GMAC has tightened its underwriting criteria and curtailed financing to customers considered to be credit risks, says Sue Mallino, GMAC spokeswoman. The policy applies both to leases and loans.
“We have reduced financing for high-risk customers,” Mallino says. “We want to carefully manage and limit our losses.”
Mallino denied a report that GMAC has halted all leases to customers with the lowest credit ratings. She said that other factors, such as size of the down payment and employment status, could result in a low-rated customer getting approved for a lease or loan. But she said that GMAC generally is not a subprime lender.
“In general terms, GMAC is not a subprime credit company,” Mallino says. “About 80 percent to 90 percent of our credit is in the prime arena for auto financing in the U.S.”
One dealer says GMAC’s caution is good for dealers. “This is just good business,” says John Rogin, owner of John Rogin Buick in Livonia, Mich. “Ultimately, it will be good for the dealers, too. We can’t have someone coming in and looking at a Cadillac STS with no money down and bad credit.”
Like other lenders, GMAC is sensitive to stress in the market, Mallino says. But since tightening its financing to subprime consumers over the past year, GMAC has slightly reduced the number of loan delinquencies.
