GMAC announced Monday it will now only give auto loans to buyers with credit scores of at least 700.
GMAC, now controlled by Cerberus Capital Management LP, was once owned by General Motors Corp. GMAC financed 43 percent of GM’s second quarter auto loans.
About 58 percent of U.S. consumers have credit scores above 700, or about 165 million U.S. adults, according to Fair Isaac Corp. The company rates consumers’ credit with a FICO score ranging from 300 to 850.
“If you look at industry sales overall, tightening credit has clearly had an impact,” GM spokesman John McDonald said. “The credit markets are tightening up everywhere, and this is just a reflection of that.”
GMAC also increased the rate it charges dealers for making loans that aren’t part of special incentive programs by 0.75 percent, Bloomberg reports. Most loans will be limited to 60 months, GMAC said in a letter to dealers.
“The decision was made as a result of the instability in the capital and credit markets,” GMAC spokeswoman Gina Proia said. “In order to prudently manage our business, we had to make some changes to prices and underwriting.”