GM ads to tell buyers they can still get loans

The finance arms have limited funding options, the market for loans bundled and resold as securities is frozen, loan losses are rising, and used vehicle values are declining, restricting their ability to support their parent companies’ sales, Standard & Poor’s credit analyst Ernie Napier wrote in a note to investors.

“As worries about an economic slowdown rise, captives are tightening their underwriting standards, building and preserving liquidity, adjusting contracted residual values on returned vehicles to ensure profitable resales, and lowering overhead costs,” Napier wrote.

Ford took the unusual step of sending a letter to dealers Wednesday reassuring them that its credit arm, Ford Motor Credit Co., will keep lending and hasn’t raised requirements to qualify for a loan.

“Many companies providing automotive lending have recently decided to exit this market or reduce their exposure by tightening their purchase policies,” Ford said in the letter. “These actions by others may be unnerving, but Ford Credit is here for you.”

Clark said he’s happy GM is publicizing the computer database but said dealers have been helping buyers check multiple financing sources for years.

He’s hoping the campaign will bring more customers, but said his business is off 60 to 70 percent from September, which wasn’t a stellar month for him.

Clark said he’s been able to get financing for people with lower credit scores, around 630, if they have a good work history. Those below that have more difficulty or can’t get loans, he said.

“Money is out there to lend if you have very good credit, and in some cases if you don’t have ideal credit,” Lindland said. “It’s trying to find those places that you can still get money from that will still lend to you, and that’s the difficult part.”

Those with lower credit scores have always had to pay higher interest rates, and that hasn’t changed, Lindland said. The median FICO score is 720 on a scale that ranges from 300 to 850, according to Fair Isaac Corp.

GM isn’t the only automaker trying to publicize that loans are available. Ford Motor Co. has said its lending arm is still making loans and leases, and Toyota Motor Corp.’s finance arm is offering zero percent loans on most of its model lineup.

GM also has zero percent financing available on some 2008 models, McDonald said, but it’s also offering $6,000 cash back on all remaining 2008s.

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