GMAC no longer has exclusive rights to finance GM car sales. As part of a government bailout of the troubled lender, car maker GM is free to seek financing for its dealers and customers from other lending institutions.
As part of a government bailout deal, GMAC will no longer have exclusive rights to provide low-interest loans to GM car buyers.
The terms of the bailout deal were made public on Friday in a regulatory filing by GMAC. The loosening of GMAC's financing relationship with GM is good news for the troubled Detroit automaker. Now, GM will be free to seek a wider range of financing options for its dealers and customers in a tight credit environment where a lack of available financing from the floundering GMAC had stifled GM sales.
GMAC has received a 5 billion dollar cash infusion from the US Treasury as part of the bailout of the US financial services industry. The move was to avoid GMAC going bankrupt. In exchange for the capital injection, the US government now owns an equity stake in GMAC, getting 5 million preferred shares paying 8 percent in interest.
GM dealers have already reported a boost in sales as a result of the GMAC bailout, which quickly made more money available for car loans to GM buyers. With GMAC giving up its exclusive rights to finance no-interest or low-interest loans to GM customers, GM may see even more of a boost in sales as dealers and car buyers have access to more loan options from other lending institutions.