GMAC to Cut Back on Auto Loans

[Nov 12, 2008.]

By Brent Lane
Rebuild.org Columnist

GMAC has announced they will decrease their Auto Loan exposure in the European markets starting the 1st of November 2008.

This cut back is due to the significant credit and capital market disruptions.  The countries affected include Czech Republic, Finland, Greece, Norway, Portugal, Slovakia and Spain.  On top on this cut back GM has announced it will decrease pricing in these areas and other area in and around Europe.

This is seen as a precursor to upcoming changes in the US where GM also plans to make changes.  Tightening credit has limited GM’s access to funds causing them to make this change.  You will also see a limited number of leases over then next few months with the possibility of being phased out entirely.

In light of recent financial troubles and numerous lay offs, GM is currently in talks with Chrysler about a possible merger.  The government has been asked to assist in this merger by providing $10 billion to make things go more smoothly.

Cerberus, owner of Chrysler, is also entertaining another merger with Renault-Nissan but prefers the deal with GM because they would obtain a large stake in GM’s financing arm GMAC.

If the merger were to go through, it is possible 25,000 jobs will be cut in Michigan alone.  That would be 10,000 hourly jobs and 15,000 white-collar jobs.

GM is expecting descent cost savings with the merger and hope to thwart the $1 billion dollars a month it is currently losing in the process.

All this news surrounding the potential merger and credit crisis has put a dark cloud over auto loans.  It is entirely possible that this credit crunch could cripple the auto industry but the government is being asked to step in to make it easier for buyers to get auto loans so that the US automakers can ride out this current financial crisis.

About the Author:
Brent Lane is a Mortgage Consultant in Roseville, California.  He helps homeowners in California with their mortgage financing and writes on his BLOG at www.thelanegroup.blogspot.com

About Author:

Brent Lane is a Mortgage Consultant in Roseville, California. He helps homeowners in California with their mortgage financing and writes on his BLOG at www.thelanegroup.blogspot.com