Bailout means GMAC will give up some GM car financing
GMAC's federal bailout comes with some strings, Bloomberg News reports: GMAC will no longer have exclusive rights to provide low-interest loans to people who buy GM vehicles.
In a filing today with the U.S. Securities and Exchange Commission, GMAC disclosed that for the next two years, General Motors Corp. will be able to offer financing incentives such as 0% loans through other lenders. The filing also says GMAC won't have to provide lease financing. GMAC is the financial arm of General Motors and is responsible for making car loans and financing dealer inventories.
Auto finance companies have lost money on leases as trade-in values have dropped because of the collapse in U.S. vehicle sales. Also, high gasoline prices devalued pickup trucks and sport utility vehicles, depressing their after-lease values.
GMAC had paid GM an annual exclusivity fee and had been required to meet targets for leases and loans, the filing said. The exclusivity deal was effective through November 2016, according to the filing.
