GMAC Gives Up Some GM Financing Rights

[RamboLiberal]

Source: Washington Post

The auto financing giant GMAC relinquished its exclusive right to provide financing to people buying General Motors vehicles in exchange for up to $6 billion in federal aid.

The deal abruptly ends an 10-year contract between GM and GMAC, according the lender's filing with the Securities and Exchange Commission yesterday. In the past, whenever GM offered vehicle financing and leasing specials, such as below-market interest rates, it did so through GMAC. The lender paid an annual fee to GM for the exclusivity and was required to meet sales targets.

Now, over the next two years, the automaker can offer incentive programs through other lenders under certain requirements, the filing said. After that period, the terms will gradually loosen until 2013, when GM will have the right to offer programs through any lender -- including GMAC -- without any restrictions or limitations.

The agreement also releases GMAC from meeting specific sales targets and the obligation to provide leases.

"I don't see anything negative in this new arrangement, as long as GMAC is still supportive of GM's effort to sell cars," said Jack Fitzgerald, owner of Bethesda-based Fitzgerald Auto Malls.



Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/01/02/AR2009010201829.html?hpid=topnews