North America’s largest auto finance company and General Motors finance arm, GMAC is tightening its financial policies including both leases and loans, in response to the tough U.S. auto market.

GM consumers with lower credit, now will have to opt for less expensive vehicles. Otherwise, if they opt for expensive ones, they need to pay higher down payments than the past. The dealers will take care of size of the down payment and employment status of the consumers before the approval of a lease or loan.

GMAC spokeswoman Sue Mallino said, “We have reduced financing for high-risk customers,” “We want to carefully manage and limit our losses.”

Mallino further said, “In general terms, GMAC is not a subprime credit company,” “About 80 percent to 90 percent of our credit is in the prime arena for auto financing in the U.S.”

Significantly, the U.S. automakers and their financing companies have been losing money on leases because of the sharp decline in the resale values of trucks and SUVs in the face of record high gas prices.

GMAC would stop offering lease incentives to consumers with lowest credit ratings. However, it would continue to offer standard lease rates. Dealers are happy to know about the GMAC’s financial cautions.

As John Rogin, owner of John Rogin Buick in Livonia, Michigan said, “This is just good business,” “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.”

This entry was posted on Thursday, July 31st, 2008 at 5:47 am and is filed under General Motors, Industry News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.