GMAC – General Motors’ main financing unit – isn’t completely out of the auto financing business, but the unit it surely taking steps to protect itself from the current economic downturn. Earlier this month GMAC announced that it would restrict auto loans to customers with credit ratings of 700 and above, and now the finance unit is encouraging dealers to offer deals from non-GMAC lenders.
GMAC sent a memo to all GM dealers on October 7th that laid out an incentives program for referring customers to non-GMAC lenders. According to Automotive News, each dealer can earn up to $250 in incentives per vehicle for recommending a non-GMAC lender.
The memo failed to address the duration of the incentives program, but it will cover 2008 and 2009 Chevrolet , Pontiac, Buick , GMC , Cadillac , Hummer and Saturn vehicles.
Not all of GM’s dealers are happy with the program but it is a step GMAC – which is 49 percent owned by GM and 51 percent owned by Cerberus – needs to take to insulate itself from bad loans. The move will likely further decrease sales, but that’s probably a better alternative than high-risk loan.
