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GMAC Requires 700 Plus Credit Score for Auto Financing

General Motors has been hit hard over the past several months. The stock has dropped considerably and then yesterday saw a 33% rise. The company is currently involved in merger conversations with both Chrysler and Ford Motors. Now GMAC, a company that General Motors has a 49% share of, has stated that only consumers with a 700 plus credit score will qualify for auto financing. The reason is the current volatility of the market.

From an Automotive News article on the topic:

“GMAC spokeswoman Sue Mallino said the finance company had to cut back on retail financing because of the company’s shrinking access to capital and rising costs.

“This is an unprecedented credit market environment right now,” said Mallino.

GMAC has also suspended some sales bonuses for its highest-volume “Platinum” dealers. Dealers say the bonuses applied only to standard-rate contracts without incentives, which is a small percent of their business. They say the bonuses amounted to $300 to $400 per contract.

For the first seven months of 2008, prime customers with scores exceeding 700 represented 74.3 percent of the U.S. new auto loan market, according to information services company Experian Automotive. A year ago, prime borrowers made up 71.1 percent of the new auto loan market. “

The article goes on to say that the used car market will be more severely affected by this restriction as less than 60% of used car buyers would qualify.