GM cuts financing costs; GMAC expands lending

General Motors Corp and its financing affiliate GMAC on Tuesday announced programs to make it easier for car and truck buyers to get financing, a day after GMAC agreed to sell the government a $5 billion stake.

Through Jan. 5, GM will offer interest rates of zero percent to 4.9 percent on loans of up to five years on various 2008 model year vehicles, and 3.9 percent to 5.9 percent on some 2009 vehicles. Many of the vehicles also carry cash discounts of $500 to $4,250.

The move is a bid to capitalize on GMAC's separate plan to provide auto financing to more U.S. consumers. GMAC will extend loans to retail buyers with credit scores of 621 or higher. In October it had restricted loans to borrowers with scores of 700 or higher.

Many analysts consider borrowers with credit scores of 620 or lower to be "subprime." Dealer wholesale financing is unchanged, GMAC said.

GMAC is owned by GM and private equity firm Cerberus Capital Management LP [CBS.UL].

The changes may help bolster sales at GM, the nation's largest automaker, following a 41 percent plunge in November.

GMAC has traditionally provided the bulk of financing for GM's retail customers and the floorplan financing that dealers rely on to carry car and truck inventory.

Mark LaNeve, GM's sales and marketing chief, said the lower financing costs will encourage customers to "get back into the game."

Source: Agencies