By Brian O’Connell
There’s plenty happening in the auto financing market these days.
For example, the average interest rate on new car loans is falling fast. According to BankingMyWay.com, current 60-month new car loan interest rates have fallen to 6.46%, compared to December 2008, when rates were around 8%.
On top of that, General Motors (Stock Quote: GM) has rolled out a new program that will cover car payments for nine months for consumers who have lost their jobs. In addition, GM’s financial services division, GMAC, is looking to keep the ball rolling with a new provision that grants new car loans to consumers with a FICO credit score of 620 or under.
To further attract new car buyers, GMAC will pour $5 billion into its consumer auto loan program in April and May, prime buying months for struggling auto dealers.
"GMAC now finances a broad spectrum of auto buyers, similar to traditional levels," said GMAC President Bill Muir in a statement last week. "Through March, we financed over $2 billion in new and used retail auto contracts. Over the next 60 days, GMAC will make available at least $5 billion in order to increase the flow of credit to U.S. automotive customers."
So what does the GMAC incentives mean to consumers?
For one thing, it means lower interest rates on new auto loans, as GMAC slashes rates to get more buyers to sign on the dotted line. The company will also hike allowable advance rates for 60-month-or-less financing terms.
Overall, GMAC wants to build on the momentum that it’s generated so far in 2009. Over the first three months of the new year, GMAC has lent out $2 billion in new car loans. This, despite the fact that new car sales are at historic lows, off 40% in terms of sales, the worst auto sales number since 1982.
To GMAC, that’s tough news from the auto industry, but for consumers, that could mean great deals at car dealerships across the country.
To figure out how much you can afford to pay for a new car, use the BankingMyWay Auto Loan calculator.
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