The Credit Crunch Gets Serious.....

[The O.C.]

So guys.....I don't have a link to any website, just info that our GM and Sales Managers told us this morning........

Effective today, GMAC is implementing these new finance restrictions:

1) GMAC will not finance or lease any consumer with less than a 700-fica score.....period.

2) GMAC will not finance or lease any car deal for anything more than dealer invoice amount....that amount including sales tax and fees.

The way I see it, in order to finance or lease a deal through GMAC, a dealer has to sell a car for invoice (or less?).....and the customer has to come up with down payment to cover taxes and fees. OR, if a dealer sells for over invoice, customer has to make up the difference in down payment.

......that's IF the consumer is over a 700-fica score.

Also, if you have a high-demand vehicle (like our Escalade Hybrid or CTS-V) that you might sell for window sticker, in order to go through GMAC, you can't even hold window sticker on these vehicles either (unless your consumer puts enough money down to cover the difference between invoice and window sticker plus sales taxes and fees.)

While not a doomsday scenario (we have other banks we can work with.....although these guys are tightening the purse strings too) it really makes a statement about the challenges the finance companies are dealing with right now.

Interesting times ahead.......

[The O.C.]

Thanks wildman......

The news release kinda speaks softly about the true nature of the changes......

Here at the dealership level, in the finance department, looking at getting deals bought, it appears way more serious.....and restrictive.

[regfootball]

hey, seriously, GM doesn't want to sell cars aside from that. Look through their incentives, they were much better last month for 2008's. How is GM supposed to sell any cars when the incentives are not as good AND they tighten up the credit?

[Drew Dowdell]

What about the financing of your inventory? Capital One just yanked dealer inventory financing in NJ and NY.

[caddycruiser]

What about the financing of your inventory? Capital One just yanked dealer inventory financing in NJ and NY.

Oy, good question.

Bad enough for people trying to buy, but what about dealers now who finance their inventory through GMAC?

Yet again, I am SO, SO glad I jumped and bought back in June, and even have a great deal with a now impossible to get SmartBuy/lease. This should be an interesting few years to follow.

I guess dealers can do more farming out loans to banks and such, but the days of GM financing offers? Hmm...

Edited October 14, 2008 by caddycruiser

[The O.C.]

What about the financing of your inventory? Capital One just yanked dealer inventory financing in NJ and NY.

I haven't heard that we have had any problems with floorplanning.......let's keep our fingers crossed.......

[rivieraranch]

SCREW GMAC and their phony plans and schemes.

[CARBIZ]

SCREW GMAC and their phony plans and schemes.

GMAC is in serious doo-doo. Your rather - ahem, cryptic remark is not helpful.

[CMG]

GMAC is making a step in the right direction hopefully.

It may cost total sales numbers on vehicles to go down, but it may also provide them with a more profitable bottom line...?

[daves87rs]

Well, if you think this is bad...just wait.

Quite a few companies are going to follow....

Rumor out right now is that Chase and Fifth Third bank are going to cut back auto loans.......

[rivieraranch]

My situation with GMAC is not such that I will ever deal with them again on any product or service.

I was shopping for a new 2007, which once qualified for the pull ahead, and arbitrarily GMAC removed the pull ahead program from the new 2007's. Their pull ahead program is only a miserable 2 months anyway on an '08.

GMAC is not helping GM or the customer right now and that is why I wrote: "screw them." There are only a few companies on my list (i.e., Homedics) but when they are on my list I will never deal with them ever again.

[CARBIZ]

My situation with GMAC is not such that I will ever deal with them again on any product or service.

I was shopping for a new 2007, which once qualified for the pull ahead, and arbitrarily GMAC removed the pull ahead program from the new 2007's. Their pull ahead program is only a miserable 2 months anyway on an '08.

GMAC is not helping GM or the customer right now and that is why I wrote: "screw them." There are only a few companies on my list (i.e., Homedics) but when they are on my list I will never deal with them ever again.

GMAC is a bank. It used to be a division of General Motors. It is no more. One would have hoped when GM was trying to raise cash and sold 51% to Cerberus that GMAC could continue its partnership as it has in the past; however, nobody saw this market implosion coming. GM appears lucky it got what cash it could out of GMAC when it did - it certainly wouldn't get that kind of money today for it!

All banks are backpedalling right now.

'Pull-aheads' were a privilege, not a right. Canada has not had a pull ahead program in about 3 years, so consider yourself lucky that you were offered any. As with all GM programs, they come and go, based on changing market conditions, which are more like quicksand these days.

Worse things are coming. We are looking at GMAC's programs and, basically, GMAC is out of the car business for now. Leases were yanked completey from Canada Aug. 1; then they yanked the 0/72 financing, which was pitched to the dealers as compensation for the loss of leases. Now we are told they will only cover off 105% on financing, which means nobody will qualify for 0 down any more.

You, sir, are part of the issue in North America right now: that general feeling of entitlement is killing our productivity. When GMAC offered pull-aheads and incentives, they were meant as icing on a cake, but then people grow addicted to that icing and get all bent out of shape when that icing isn't offered.

Better the question is where was your salesperson? He/she should have kept you abreast of the program and given you ample warning as to when it might be cancelled.

Or, are you one of these people who jumps from dealer to dealer, not stopping long enough to establish any kind of relationship? If that's the case, you reap what you sow.

[regfootball]

well it comes down to this. do they want the tools to move the metal?

in the case of me, 99% good to go on a GM car on Sept 30, and now on Oct 1-15 on a 2008 closeout model that is NOT selling, it's 2500 higher. lack of rebates, lack of financing incentive. Ford, same thing. Like I told the guy at the dealer on the phone the other day....I fully expected to roll right into a new lease on an equivalent product. But you give me no options to get the same deal. So, bye bye.

It's their call as to whether they want to move the metal. there is plenty of other aggressive competition out there that will lease to me or give me a loan. GM only lost 16% lost month while toyota lost like 30%? This month toyota is 'saved by zero'. GM pulls back like a turtle in its shell. Can't wait to see GM get creamed this month.

[GMTruckGuy74]

I was totally pi$$ed off the other day when I saw this news in an Automotive News e-mail. I will be in the market for either a leftover 2009 or an early 2010 vehicle when my GMAC/AURA lease expires November 2009, but with my credit score under 700 (mid-600s) and not a lot of cash on hand for a down payment, it looks like GMAC is willing to let a loyal nine year customer go. I understand I am responsible for my credit score being low, but for 9 years I have paid GMAC on time for every vehicle I leased or financed through them, and this is how they'll repay my loyalty? I'm so glad the wife got her deal in June (no money down, GM Supplier Price, 2-month Pull-Ahead offer, $2,500 rebate for financing with GMAC, 0% for 72 months) so that's one less car I have to worry about. But now I have a year to figure out what I am going to do about replacing my SmartLease with another GM car. I can only hope the market stabilizes and improves before that time arrives for me to visit a showroom.

[The O.C.]

I was totally pi$$ed off the other day when I saw this news in an Automotive News e-mail. I will be in the market for either a leftover 2009 or an early 2010 vehicle when my GMAC/AURA lease expires November 2009, but with my credit score under 700 (mid-600s) and not a lot of cash on hand for a down payment, it looks like GMAC is willing to let a loyal nine year customer go. I understand I am responsible for my credit score being low, but for 9 years I have paid GMAC on time for every vehicle I leased or financed through them, and this is how they'll repay my loyalty? I'm so glad the wife got her deal in June (no money down, GM Supplier Price, 2-month Pull-Ahead offer, $2,500 rebate for financing with GMAC, 0% for 72 months) so that's one less car I have to worry about. But now I have a year to figure out what I am going to do about replacing my SmartLease with another GM car. I can only hope the market stabilizes and improves before that time arrives for me to visit a showroom.

Not only that......but even if you wanted to, there's no guarantee GMAC would even finance you if you wanted to buy-out your AURA at the end of the lease! That's what I'm facing now too.....my '07 CTS is up in 11-09.....and I most likely won't be able to get into a new one.....and thought I'd buy my car out at the end fo the lease because it's been SUCH a good car....but I might not even be able to do THAT either....

[Brett]

My situation with GMAC is not such that I will ever deal with them again on any product or service.

I was shopping for a new 2007, which once qualified for the pull ahead, and arbitrarily GMAC removed the pull ahead program from the new 2007's. Their pull ahead program is only a miserable 2 months anyway on an '08.

GMAC is not helping GM or the customer right now and that is why I wrote: "screw them." There are only a few companies on my list (i.e., Homedics) but when they are on my list I will never deal with them ever again.

A pull-ahead program is not some pre-ordained right. Weird that you would choose not to work with GMAC because of that, but hey, it's a free country

[traumadog]

Last I heard, GMAC was $1.5 Billion in the red last year. So I'm sure in this environment (and with GM's own credit rating in the trash), their loans won't be cheap. And therefore, they're going with the near-zero-risk market.

And besides, GMAC might wind up being 100% Cerberus Financial before too long.

[CARBIZ]

I was totally pi$$ed off the other day when I saw this news in an Automotive News e-mail. I will be in the market for either a leftover 2009 or an early 2010 vehicle when my GMAC/AURA lease expires November 2009, but with my credit score under 700 (mid-600s) and not a lot of cash on hand for a down payment, it looks like GMAC is willing to let a loyal nine year customer go. I understand I am responsible for my credit score being low, but for 9 years I have paid GMAC on time for every vehicle I leased or financed through them, and this is how they'll repay my loyalty? I'm so glad the wife got her deal in June (no money down, GM Supplier Price, 2-month Pull-Ahead offer, $2,500 rebate for financing with GMAC, 0% for 72 months) so that's one less car I have to worry about. But now I have a year to figure out what I am going to do about replacing my SmartLease with another GM car. I can only hope the market stabilizes and improves before that time arrives for me to visit a showroom.

Right now, many companies are just trying to weather this economic maelstrom any way they can. For now, forget about GMAC. Their hands are tied. Twelve months from now, things will either be a lot better, or GM will be gone - simple as that. The entire economic landscape is undergoing tectonic shifts right now; we may not even recognize WallStreet or Detroit in a year's time - for better or worse.

In the short term, however, I've looked at numbers that GM is showing us and times will be good for customers who are prudent with their money. The trouble is, GMAC has been taking a lot of questionable credit, or burying a lot of negative equity in the past, and the chickens have come home to roost.

As the entire American economy is learning right now, if you don't have the money you shouldn't be buying a new car (or house.) That's the ugly truth, folks. However, with a bit of belt tightening and prudent money managing, the deals are still there. We've just been so addicted to 0 financing that we can't see the money was coming from somewhere else.

Whether it's buying a new car, or buying imported goods, I think we can now see the folly of our ways. This party couldn't last forever. Lets hope the hangover doesn't either.

[GMTruckGuy74]

Right now, many companies are just trying to weather this economic maelstrom any way they can. For now, forget about GMAC. Their hands are tied. Twelve months from now, things will either be a lot better, or GM will be gone - simple as that. The entire economic landscape is undergoing tectonic shifts right now; we may not even recognize WallStreet or Detroit in a year's time - for better or worse.

In the short term, however, I've looked at numbers that GM is showing us and times will be good for customers who are prudent with their money. The trouble is, GMAC has been taking a lot of questionable credit, or burying a lot of negative equity in the past, and the chickens have come home to roost.

As the entire American economy is learning right now, if you don't have the money you shouldn't be buying a new car (or house.) That's the ugly truth, folks. However, with a bit of belt tightening and prudent money managing, the deals are still there. We've just been so addicted to 0 financing that we can't see the money was coming from somewhere else.

Whether it's buying a new car, or buying imported goods, I think we can now see the folly of our ways. This party couldn't last forever. Lets hope the hangover doesn't either.

It's a shame that GMAC is setting a strict policy about dealing with people with less than a 700 FICA score... why couldn't they reveiw each application and see if the person applying has a positive history with GMAC and as long as their credit is not horrible (below 620), "deal" with them? Of course I'm worrying about this now for no good reason, seeing as I won't be in the market/have a financing need until the late summer of 2009 at the earliest. But it makes me mad that those GMAC customers that have done what they were expected to do with regards to paying back their loans on time are now going to thrown away just because they don't have a 700 (that's like saying since there is one bad employee at your job, everyone will be fired). My dad told me when I was a teen that if "I kept myself in good standing with GMAC and paid them on time, they'll always be there for me". I don't feel the love now with their news this week...

[rivieraranch]

GMAC is a bank. It used to be a division of General Motors. It is no more. One would have hoped when GM was trying to raise cash and sold 51% to Cerberus that GMAC could continue its partnership as it has in the past; however, nobody saw this market implosion coming. GM appears lucky it got what cash it could out of GMAC when it did - it certainly wouldn't get that kind of money today for it!

All banks are backpedalling right now.

'Pull-aheads' were a privilege, not a right. Canada has not had a pull ahead program in about 3 years, so consider yourself lucky that you were offered any. As with all GM programs, they come and go, based on changing market conditions, which are more like quicksand these days.

Worse things are coming. We are looking at GMAC's programs and, basically, GMAC is out of the car business for now. Leases were yanked completey from Canada Aug. 1; then they yanked the 0/72 financing, which was pitched to the dealers as compensation for the loss of leases. Now we are told they will only cover off 105% on financing, which means nobody will qualify for 0 down any more.

You, sir, are part of the issue in North America right now: that general feeling of entitlement is killing our productivity. When GMAC offered pull-aheads and incentives, they were meant as icing on a cake, but then people grow addicted to that icing and get all bent out of shape when that icing isn't offered.

Better the question is where was your salesperson? He/she should have kept you abreast of the program and given you ample warning as to when it might be cancelled.

Or, are you one of these people who jumps from dealer to dealer, not stopping long enough to establish any kind of relationship? If that's the case, you reap what you sow.

I am sure that you're a good person, but you obviously do not know anything about my situation more than what I may have posted. My complaint is with the aribtrary nonsense reasoning underlying GMAC's erratic actions. It happens to impact me negatively, so therefore, I exercise my prerogative not to deal with them any more. I am not asserting 'entitlement' to dick here.

My salesperson? Don't get me started about that. I don't have one any more. He sold my wife her Mercedes Benz wagon when he was at MB and after he moved to B, P, GMC, he helped me lease my current vehicle. Love him. But he moved out of state and no longer works in the car business. The dealer I leased from is a butthole place I'd rather not deal with. That place never apprised me of crap.

I'm working with some dealers right now on what I am looking for and eventually I will land something, but it will be in spite of GMAC, which I will forever despise and villify, so, "screw them," I say.

Edited October 15, 2008 by rivieraranch

[biff]

I never understood how GMAC got any business anyway. My credit score has always been 750+ and they've never been close to competitive on any of my auto loans. Anyone else have similar experience?

[shesellschevys]

Ha !! I love this quote so much "My complaint is with the aribtrary nonsense reasoning underlying GMAC's erratic actions."

Well, thanks to their "erratic" behaviours in the past such as rolling in pull-aheads and shoving liability into the final numbers of the lease game, they've worked themselves (almost) right out of the business of financing.

When you really stop and think about it, how can a company (erratically or not?) borrow money at 10% and finance it to it's customers for 0% over 72 months and be profitable?? How would that make sense to GMAC's lenders?? Would you borrow money at 10% to turn around and hand it to someone interest free???

Gone are the days when I can walk in with my GM discount, use a lease loyalty and a few Visa points and lease a $50,000 Avalanche for 400/month! but I'm not crying about that. I'll be happy to own what I can afford in the future. Maybe a shiny new Malibu with the freight & fees due on delivery.

~ j

[CARBIZ]

Ha !! I love this quote so much "My complaint is with the aribtrary nonsense reasoning underlying GMAC's erratic actions."

Well, thanks to their "erratic" behaviours in the past such as rolling in pull-aheads and shoving liability into the final numbers of the lease game, they've worked themselves (almost) right out of the business of financing.

When you really stop and think about it, how can a company (erratically or not?) borrow money at 10% and finance it to it's customers for 0% over 72 months and be profitable?? How would that make sense to GMAC's lenders?? Would you borrow money at 10% to turn around and hand it to someone interest free???

Gone are the days when I can walk in with my GM discount, use a lease loyalty and a few Visa points and lease a $50,000 Avalanche for 400/month! but I'm not crying about that. I'll be happy to own what I can afford in the future. Maybe a shiny new Malibu with the freight & fees due on delivery.

~ j

The money has never been 'free.' General Motors gives cash to GMAC up front and GMAC has been able to borrow money with that cash and make profits on the hedge. But that only worked when GMAC could 'borrow' at 6 or 7%. Now that they are forced to buy at a much higher rate, it no longer makes sense to GM to keep propping them up. Plus, the number of defaults has skyrocketed and that is somelthing neither GM or GMAC can predict.

It's all about controlling the long term expense side of things. When GM was profitable and money was cheap, nobody gave a damn about long term exposure. Now long term exposure is everything.