GMAC to lend money to those with credit scores higher than 700

We already saw how the economy has affected the markets, from real estate and auto industries, to financial institutions. Long gone are the times when 0% down and “no credit needed” loans were widely offered by lenders and we welcome the times where one would need to demonstrate financial stability and good credit history in order to get approved for a car loan.

So, when GMAC announced that they will only start lending money to people that have a credit score of more than 700, I did not even blink. It was an expected decision and followed by many other lenders as well. GMAC’s spokeswoman, Sue Mallino, stepped forward and sadi that the company is cutting back on retail financing due to the stability in the credit markets and decreasing access to capital and risings costs.

Also, the dealerships can kiss their sales bonuses goodbye, since GMAC also announced that it will suspend sales bonuses for its highest-volume “Platinum” dealers. Despite the tough market, BMW Financial Services, the institution behind BMW’s loans and lease rates, has recently revised their strategy and came out with some very attractive financing and lease rates.

With the big corporations getting tougher on the credit applicants, I’m wondering if there will be new players coming into the game, smaller companies that can afford the risk.

One Response to “GMAC to lend money to those with credit scores higher than 700”

Gragop says:

October 25, 2008 at 8:35 am

thank god they’re actually backing out lending incentives and focusing more on financing. It’s time people actually drive cars they can afford. That’s the sort of stuff that will bring America out of a recession.