GMAC to make Subprime Auto Loans
Are you kidding me? Isn't this how we got here in the first place?
General Motors Corp and its GMAC funding affiliate launched programs
on Tuesday to lure U.S. car and truck buyers back into showrooms as the largest
U.S. automaker tries to revive its sagging fortunes.
GM began offering
zero-percent financing on some models, and GMAC resumed lending to a wider range
of potential customers, after the government said it will inject billions of
dollars to help ensure that both survive.
Through January 5, GM will
offer zero percent to 4.9 percent financing on loans of up to five years on some
2008 model-year vehicles, and 3.9 to 5.9 percent on some 2009 vehicles. Many of
the vehicles also carry cash discounts of $500 to $4,250.
GMAC,
meanwhile, will extend loans to retail buyers with credit scores, known as FICO,
of 621 or higher. In October, it had restricted loans to borrowers with scores
of 700 or higher.
Many analysts consider borrowers with credit scores of
620 or lower to be "subprime." The median U.S. credit score is 723, according to
Fair Isaac Corp's myFICO unit.
"The bottom line is much better access to
funding," said Mark LaNeve, GM's vice president for North American sales, on a
conference call with reporters. He said GMAC may now be able to fund 75 to 80
percent of new vehicle purchases, up from 40 percent since October.