General Motors hand in hand with GMAC has announced that they have come to the end of the line of their used vehicle incentive program. As of November 3rd the program will be null and void.
Under the program, selected models of GM received 3.9% interest loan terms for up to 60 months. The 4.9% incentive for higher end vehicles such as the GMC Yukon, Yukon XL, Envoy, Chevrolet TrailBlazer, Tahoe and Suburban were also scrapped.
In a totally absurd move, GMAC the financing arm of General Motors, or Cerberus Capital announced that moving forward applicants will have to have a credit score (FICO) of over 700 to qualify for a loan.
Also, loans will only be extended to 60 months total. No more 72 month, 84 month or 96 month loans will be taken.
GMAC is already expecting to lose 25% of the business of new car loans as a result of this move. Cerberus, which owns 51% of GMAC is most likely applauding this ruling, as it wants to protect it’s future revenues. GM on the otherhand is most likely going into talks with other finance companies to remedy the situation and find proper lending solutions for it’s dealers and end customers.
Another chapter in the automotive world is being written, where the beancounters are winning over common sense. It’s no use building cars if people can’t afford them. Someday even people in Detroit will understand these fundamentals, but until then their stock will be valued accordingly.
