By Dan Bewley, The News On 6
UNDATED -- There could be changes for those shopping for a new car in the new year. The credit crunch has fewer people purchasing cars. Auto dealers across the country say a change to the largest car loan program in the country should make it easier for people to buy a new car.
It didn't make as many headlines as the $17 billion bailout for the auto industry, but analysts are saying the latest shot in the arm for the auto industry is just what's needed to get more drivers in new cars.
Vehicle sales in November were at a 26 year low, falling 37%. Even at Don Thornton Cadillac Hummer SAAB, monthly sales have slowed close to 50%. But, now comes $5 billion in federal aid for GMAC financing.
Just in the past several months the largest auto loan organization in the country has tightened its purse strings and financed fewer car loans.
"They just didn't have money to do the retail part of their business so the qualifications were more stringent, but they weren't even loaning money to good credit customers because their rates were not competitive," said GM dealer Tom Bloomfield.
Two months ago, GMAC would not approve a loan if the buyer's credit score was below 700, a score typically considered exceptional. Now, GMAC has said it will offer financing to customers with a credit score as low as 621.
"With this money that they have been able to use, they can not only lower their qualifications, but they can actually loan money," said GM dealer Tom Bloomfield.
The $5 billion comes on the heels of the $17 billion automaker bailout approved earlier this month. Analysts say the money should help domestic auto dealers fight off the credit crunch and get drivers back to the dealerships.
The Grimm family is one example; they're out shopping for their first ever new car.
Dealers are saying the money puts GMAC back in the marketplace, which is good for everyone.
"They're a great lender to deal with. They're consumer oriented and now that they're able to get back in business I think it's going to be great for the business and consumers," said GM dealer Tom Bloomfield.
General Motors says the loan to GMAC will allow it offer 0% financing for up to 60 months on certain models.
Analysts hope GMAC's lifting of credit restrictions sets an example for banks that have yet to use their bailout funding to free up consumer loans.