GMAC Makes Borrowing Easier
Friday, January 2, 2009 at 11:14AM The New York Times reported Tuesday that GMAC, the financial arm of General Motors, "began aggressively trying to draw consumers back into dealerships."
"GMAC said it would begin making loans immediately to borrowers with credit scores of 621 or higher, a significant easing from the 700 minimum score the company started requiring two months ago as it struggled to stay afloat. And G.M. said it would offer a new round of low-rate financing, including zero percent interest on some models.
The infusion of capital from the Treasury Department late Monday was seen as critical for both GMAC and G.M., which relies on the lender to finance car buyers and dealer inventories. GMAC is jointly owned by Cerberus Capital Management, the private equity firm, and G.M.
The Treasury will buy $5 billion worth of preferred shares in GMAC as part of the $700 billion financial rescue known as TARP, for Troubled Asset Relief Program, and it will lend $1 billion to G.M., which, in turn, will invest $1 billion in GMAC."
Do you feel that GM's decision to make credit more readily available to consumers may impact mortgage lenders and the real estate industry? Would this be a good thing? Why or why not?
C.A.R. Staff
Reader Comments (3)
It's about time! An action causes a reaction, hopefully the reaction will be for other lending institutions to follow suit. We live in the age of credit and therefore credit is needed to keep businesses and economies afloat.
They are taking aggressive action, considering the average credit score is 660 in the United States. 2008 has been a learning lesson for every industry, and particularly industries tied to housing. Additionally, with new safeguards, controls and realistic guidelines, we will see brighter days ahead.
The lowering only applys to your AUTO Fico score, yes there is one, NOT your normal FICO Score. So if you pull your FICO score online and is says you are above the 620 limit, that dont mean a thing. Auto dealerships have there own FICO count and it is way different than the normal one.
Many people are having a hard time trying to repair credit because of the mortgage crisis but the low prices in the West are pushing home sales up and relieving some of that economic tension. Home sales went up by 13 percent in the West while home prices dropped 26 percent. In the United States, overall home sales are still down about 11 percent compared to last year. At least we are seeing some progress in some parts of the country. People are even changing the way they view things. More and more people are becoming more responsible with their finances and are doing their best to repair credit. Those who dreamed of getting that $1 million home has opt to a $500,000 home; which is looking pretty good in today’s economy. According to Business Week, trading down is the new real estate reality. Although the East appears to be a little slow to catch on (in terms of mortgages), I’m sure they’ll catch on quicker than we think. To read more about the real estate market and how to repair credit, check out this article.