Lending Hope to Car Buyers, Auto Industry

Would-be buyers of GM cars could get financing deals unseen in months.

ByABC News
December 31, 2008, 5:34 PM

Jan. 1, 2009— -- The cars are there and now, so are the loans -- but consumers may not know it yet. That's where people like Jim Mays come in.

Mays is the sales manager at a Chapman Chevy dealership in Phoenix. Shortly after word got out that General Motors was rolling out offers unseen in months -- like zero percent financing on certain models -- Mays sent an e-mail blast to up to 20,000 customers announcing the new deals.

"Any time you've got zero percent [interest rate], that attracts a lot of attention in the marketplace," he said. "That's a good thing."

Calls from interested consumers have started coming in and "they're excited," Mays said.

In the new year, new financing offers from GM and looser lending standards at GMAC, the auto loan giant partly owned by GM, are offering new opportunities for would-be auto buyers once shut out of the market and new hope to dealers battered by 2008's dismal car sales.

Auto Nation, the largest chain of U.S. auto dealerships, has encouraged its GM dealers to reach out to customers who had sought GMAC financing before but had been rejected.

Dealers are going to approach "customers who are stuck in the credit crisis to see if this helps them," said Auto Nation spokesman Marc Cannon.

The sudden new crush of auto loan access stems from the government's latest auto bailout: On Monday -- a week after the Bush administration announced it would provide billions in emergency loans to GM and Chrysler -- the Treasury Department said it would invest $5 billion from the government's Trouble Asset Relief Program (TARP) into GMAC.

The following day, GMAC announced that it would lower the minimum credit score required for its loan to 621.

In October, pressed by the credit crunch, GMAC raised the minimum to 700, a target that excluded many would-be buyers. Now, GMAC "will continue to employ responsible credit standards, but will be able to relax the constraints we put in place a few months ago," GMAC president Bill Muir said in a press statement released by the company earlier this week.