GMAC Leaves Californians With Few Car-Loan Options

GM's financing arm has decided to restrict loans to only customers with the best credit, due to the destabilization in the economy and the tightening of the credit market. Only car buyers with a credit score of 700 or higher will qualify for a car loan.

The state of California is protesting GMAC's decision, saying it will leave 40% of Californians with no way to obtain a car loan, resulting in numerous dealerships filing for bankruptcy.

Peter Welch, president and CEO of the California Auto Dealer Association, wrote a letter to GMAC CEO Alvaro de Molina and Treasury Secretary Henry Paulson warning that GMAC's strict lending guidelines would have a disastrous impact on dealerships across the state. GM already expects dealer profits to fall 18% for the year.

While California's dealers are the first to point it out, GMAC’s new lending rules will undoubtedly have an impact across the country.

California Dealers Say GMAC Rules Cut 40% of Customers (Detroit News)

Comments

While I sympathize with those who will have a harder time buying a car, GM is not obligated to make anyone a car loan. They are well within their rights to place any restrictions they choose on their own loans. If people can't get a GMAC loan, they need to explore other options.

This is great move by GM as they are doing the public a big favor. If your credit score is under 700 then you should only buy cars with cash until you get your financial life straightened out. Also you shouldn't be buying any GM car or truck new as they don't hold their value.

I agree completely. Sane comments in an insane world.

don't know if child supports gets into credit report, but a persom with a score of 680 w/o child support may be better than a 720 w/child support.

GM is shooting themselves in one foot amd kicking themselves in the butt with the other. Who do they think buys their cars? Especially in California where imports are cool and domestics drool..

GMAC is not an exclusive lender to GM customers. Their loans are available to anyone...well anyone who is financially responsible.

Not to mention the fact that it's 49 percent owned by Ceberus (sp?).

I like the idea of a national credit value rating, it would be great to implement such a system here in Australia. Does anyone know how it works?