- Feb 14, 2002
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http://online.wsj.com/article/...?mod=yahoo_hs&ru=yahoo
0% for 60 months on select models and 4.9% for 60 months on other cars like the Corvette. Credit scores of 620 or higher which about includes everyone with a pulse. Just like the good old times. This time financed by taxpayers you and me. Credit bubble 2.0. Govt plays bank. Everyone hurry and buy a car you can't afford financed by Uncle Sam.
DETROIT -- General Motors Corp. said Tuesday it will offer 0% financing on some models in a bid to jump-start sales, helped by a federal government cash infusion to its GMAC LLC funding arm. The auto maker's North America sales chief said management is also considering a return to the leasing business and expects dealers to get more aggressive after GMAC got the $6 billion commitment Monday.
"Hopefully we can return to leasing but at a much lower risk," Mark LaNeve said in a conference call Tuesday. "It is something we are looking at but no decisions have been made."
The largest U.S. auto maker by revenue had to scale back incentives and halt leasing in a stagnant domestic market as loss-making GMAC wrestled with a restructuring plan that left it unable to provide loans and leases.
The auto and real-estate lender didn't write a single lease in November, and issued 22% fewer auto loans in the third quarter compared with a year earlier. Ford Motor Co. also tightened lending while Chrysler LLC exited loan financing altogether.
GM's move could reignite a price battle, as Toyota Motor Co. and Honda Motor Co. Ltd. are offering aggressive incentives after U.S. car and light-truck sales fell to a 25-year low in November. Just three years ago, when U.S. rivals introduced 0% deals, the Japanese manufacturers eschewed such deals.
GMAC's expanded lending applies only to retail sales, but the company is also a crucial funds supplier to GM's dealer network.
GM is attempting to revive car buying that has been stymied by a slowing economy and the inability of customers with lower credit scores to access money from banks that are themselves receiving federal bailout money.
GM will offer financing through GMAC at rates as low as 0% for up to 60 months on select new cars and trucks. The reduced rate is available through Jan. 5 on 2008 and select 2009 models.
GMAC said it will modify its credit criteria to include financing for customers with a credit score of 621 or higher, compared with the 700 minimum score it put in place two months ago. It won't finance higher-risk transactions, defined by a credit score of 620 or below. The median U.S. consumer credit score is 723.
"We will continue to employ responsible credit standards, but will be able to relax the constraints we put in place a few months ago due to the credit crisis," GMAC President Bill Muir said in a statement.
J.P. Morgan analyst Himanshu Patel said in a research note that the GMAC funding reduces the likelihood that GM would be forced to file for Chapter 11 bankruptcy protection.
"While an eventual GM Chapter 11 cannot be entirely dismissed if various stakeholders fail to meet required concessions, federal aid to GMAC suggests the government is probably now so financially entangled in that a Chapter 7 liquidation of [GM's auto operations] seems highly unlikely," Mr. Patel said.
0% for 60 months on select models and 4.9% for 60 months on other cars like the Corvette. Credit scores of 620 or higher which about includes everyone with a pulse. Just like the good old times. This time financed by taxpayers you and me. Credit bubble 2.0. Govt plays bank. Everyone hurry and buy a car you can't afford financed by Uncle Sam.