BIRMINGHAM, Ala. — Regions Financial Corp. has become the latest finance company to discontinue its indirect lending platform. The announcement was made amid news of tightening credit standards at GMAC Financial Services.
Dealers learned last Thursday that Regions planned to eliminate its loan program for at least 2,600 dealerships across the nation. A spokesman for the company said Regions will still make car loans, but customers will have to apply directly.
On the same day, GMAC told dealers it will begin limiting purchases to contracts with a credit score of 700 or above. It will also restrict contracts with higher advances and longer terms. This means some consumers will no longer be able to borrow above the dealer's invoice price, and that some borrowers will be restricted to loans of no more than 60 months.
Recent financing statistics from the Power Information Network (PIN) also reveal a tightening credit market, with negative-equity trades dropping in September to their lowest point in five years (25.92 percent of the mix) and cash transactions rising to their highest point since October 2007 (29.4 percent).