Jalopnik: car loans

GMAC Now Officially Requires 700-Plus FICO Score For New Car Loan

Ray Wert — Mon, 13 Oct 2008 18:20:00 EDT

The Financiapocalypse continues. We just received a copy of an e-mail that went out at GMAC, the lending arm jointly owned by GM and Cerberus, from Barbara Stokel, GMAC's EVP of North American Operations. Here's the most salient detail: you'll now need a minimum 700 credit bureau score to get a car loan at dealer invoice or below from GMAC. The full e-mail is below the jump to explain that news as well as the news they'll be restricting approval of contract terms beyond 60 months unless a buyer qualifies for GM-supported 72-month incentives. So what does this means to you? Well, unless you've got above average credit, it's going to become much more difficult to buy a new car. Frankly, that's probably a good thing for consumers. It's probably a bad thing for GM sales numbers.

GMAC Leaders and NAO Team:

In light of the disruption in the credit markets, GMAC NAO is announcing a temporary, more conservative purchase policy for retail auto contracts in the United States. In the short term, we will limit auto contracts to those consumers who have a minimum 700 credit bureau score, with an advance rate equal to or less than dealer invoice. This means that consumers will be required to make a down payment. In addition, we will restrict approval of contract terms beyond 60 months, except for those customers qualifying for GM-supported 72-month incentives currently advertised.

These are extraordinary times, and we must take these prudent steps to focus our resources on high quality retail contracts and critical areas such as dealer wholesale financing, until the credit markets are stabilized. To assist dealers, GM has enhanced its retail incentive programs in October to utilize more cash incentives. GM and GMAC will continue to work collaboratively through these challenging financial market conditions.

Barbara Stokel

Executive Vice President, North American Operations

Toyota To See "Large" Hit From Used Car Values

Ray Wert — Wed, 06 Aug 2008 09:00:00 EDT

The Wall Street Journal reports this morning the super number one awesome best automaker from the land of the rising sun said it will set aside major reserves for its first quarter to cover losses from vehicle leases in the U.S. And with that, Toyota now follows Chrysler, GM and Ford into the land of plummeting used car values.

Although Toyota spokespeople claim they're "going to have to make large provisions," they don't appear ready to comment on how much those charges might be as the automaker plans to report its fiscal first-quarter results for the period ended June 30 on Thursday.

Jalopnik Snap Judgment: Of Toyota's total vehicles sold in the U.S., about 16% were sold on lease compared to approximately 20% for the Detroit automakers. Still, that's enough of a liability to cause even the great and mighty Toyota to feel some pain on used car returns off leases. At a time of $4-per-gallon gas, those Tundra truck and big Highlander SUV buyers aren't going to want to be buying those cars back at the end of their lease term wethinks. [via WSJ (sub. req.)]

Chrysler Financial To No Longer Offer Auto Leases... Wait, What?

Ray Wert — Fri, 25 Jul 2008 16:00:00 EDT

Yeah, we just heard Chrysler Financial will no longer be offering auto leases. We're just as stunned as everyone else. Hit the jump for the full report and our analysis including what this means for Cerberus-owned GMAC.

Follow up on WSJ report that Chrysler will no longer offer auto leases through its lending arm
As mentioned at 14:24, Chrysler has started telling dealers it will no longer offer auto leases through its lending arm Chrysler Financial, people familiar with the matter said on Friday. Chrysler is expected to brief dealers formally later today in a conference call, these people said. The move comes as auto makers and their financing units have been piling increasing losses stemming from leases, mainly as a result of falling resale values of trucks, sports-utility vehicles and other less fuel-efficient models that many consumers now shun.

Jalopnik Snap Judgment: We'd heard Chrysler Financial was having a tough time as of late what with all of those default loans and oh yes, the resale values of trucks and SUVs dropping like a rock. This is only surprising from a shock value perspective, but what else should we expect? Guess the days of a cheap lease deals on a vehicle are now gone with the winds of higher fuel economy.

What concerns us more is — doesn't Cerberus also own a controlling stake in GMAC? What does this mean for them? Will they suddenly no longer be offering lease loans either?