GMAC, which gives car loans to most Chrysler dealers for their inventory, has suspended financing to about 80 dealers. Left Lane News is reporting that GMAC will give the suspended dealers 30 days to get their finances in shape or be permanently cut-off from GMAC’s car loans in the future.
Chrysler dealers unable to get car loans through GMAC could seek out other lenders, but since their creditworthiness has already been called into question, it seems unlikely that many will get alternative financing. Most dealerships get loans for their cars, rather than buying them outright. If a dealership was unable to get loans for its new cars, it would most likely be forced to close.
This move will not affect consumer car loans. Customers of the suspended dealerships will still be able to get car loans through GMAC normally. The dealers have not been cut by Chrysler like the 789 that were during Chrysler’s bankruptcy. The dealerships will be able to continue selling cars while they have stock. Once the stock runs out, they will need to get alternative financing for their car loans or buy the cars outright from Chrysler.
Left Lane News is reporting that 60% of all Chrysler dealers get their car loans through GMAC, GM’s former captive finance company. Approximately 6% of those dealerships had their floor plan financing suspended and will have to look elsewhere for car loans.
Logo via GMAC.