FI showroom red and grey logo
MenuMENU
SearchSEARCH

GMAC Receives $6 Billion from Fed, Will Consider 621 and Above

GMAC Financial Services will immediately loosen its lending policies after receiving a $6 billion shot in the arm from the U.S. Treasury. Two months after restricting financing to customers with a minimum 700 credit bureau score, the captive lender said it will now consider apps that carry a score of 621 or higher.

by Staff
December 30, 2008
4 min to read


WASHINGTON — GMAC Financial Services will immediately loosen its lending policies after receiving a $6 billion shot in the arm from the U.S. Treasury. Two months after restricting financing to customers with a minimum 700 credit bureau score, the captive lender said it will now consider apps that carry a score of 621 or higher.

“The actions of the federal government to support GMAC are having an immediate and meaningful effect on our ability to provide credit to automotive customers,” said Bill Muir, president of GMAC. “We will continue to employ responsible credit standards, but will be able to relax the constraints we put in place a few months ago due to the credit crisis.”

Ad Loading...

The captive finance company’s announcement came after the Treasury Department announced yesterday that it will purchase $5 billion in senior preferred equity. Additionally, the Treasury agreed to lend up to $1 billion to GM so the automaker can contribute to its captive finance company’s reorganization as a bank holding company.

The Treasury exercised this funding authority under the Emergency Economic Stabilization Act's Troubled Asset Relief Program (TARP). The preferred stock purchase and the loan to support GMAC's rights offering are part of an auto industry-focused TARP program, which was announced on Dec. 19. The loan is in addition to the $17.4 billion the Treasury agreed to lend to General Motors and Chrysler LLC.

As part of the deal, GMAC will issue warrants to the Treasury in the form of additional preferred equity of $250 million. The company must also be in compliance with section 111 of the Emergency Economic Stabilization Act, with enhanced restrictions on executive compensation.

The move by the Treasury comes after GMAC missed a crucial deadline last week to transform itself into a bank holding company. With the Treasury’s move, GMAC now gains access to the $700 billion federal bailout package.

The Fed approved GMAC’s application to become a bank holding company on Dec. 24, but the approval was contingent on the finance arm’s ability to raise new capital by last Friday. To meet the requirement, GMAC needed to raise $30 billion in capital, a majority of which would come from the debt-to-equity exchange. The Fed also stipulated that $2 billion of total capital come from new equity.

Ad Loading...

The Treasury’s offer for the $6 billion in aid came simultaneously with GMAC’s announcement that it had raised enough capital to satisfy the Fed’s requirements. However, it is unclear whether the government’s intervention prompted or followed GMAC fulfilling the capital requirement.

As a bank holding company, GMAC could request up to $6.3 billion from the $700 billion bank bailout package, estimated CreditSights analyst Richard Hoffman in an Associated Press story last Saturday. GMAC has not disclosed how much money it would request from the federal government’s bailout fund.

GMAC’s inability to provide financing to car buyers and dealers would deal a serious blow to its parent company and its new-vehicle sales, with more than half of new-vehicle sales involving loans from financing arms like GMAC and banks, according to Tom Libby, an auto industry analyst at J.D. Power and Associates. And even with its expanded credit criteria, GMAC said it will not finance higher risk transactions characterized by a 620 score and below.

“If this source of credit would diminish, it would greatly affect sales. That’s one reason for the dramatic decline in new-vehicle sales in recent months,” Libby said.

Edmunds.com predicted that GM sales fell 39.3 percent in December compared to the year-ago period. The automotive information Website also said the domestic automaker’s market share is expected to be 22.8 percent of new-vehicle sales, down from 23.1 percent a year-ago.

Ad Loading...

With those dismal sales figures, the deal between the Treasury and GMAC provides hope for dealers and car buyers who rely on credit.

“The deal (between the Treasury and GMAC) is significant in terms of shoring up the finance arm’s access to funding and ability to function as a financial intermediary,” said Brian Bethune, an economist with IHS Global Insight. “These developments will substantially ease the upward pressure that we have seen on auto loan borrowing spreads, and provide greater access to auto loan credit for American households.”

Topics:F&I

More F&I

Man holding magnifying glass over sales volume paper.
F&IMay 29, 2026

Why Your F&I PVR Is Misleading You

Here’s a handy checklist of the numbers to track in 2026 instead.

Read More →
Photo of woman typing on a laptop as she sits on a couch
F&Iby Hannah MitchellMay 29, 2026

Auto Consumer Anxiety Presents Opportunity

A survey of U.S. drivers found the majority are concerned about finances and the economy, but those fears make many ready to buy vehicle-protection products.

Read More →
Dustin Gingerich standing on stage giving a presentation
F&Iby Lauren LawrenceMay 28, 2026

Humble and Hungry: 12 Rules for an F&I Life

Dustin Gingerich, with a decade in the F&I business under his belt, shares his thoughts on leadership, building trust with customers, and the importance of learning and innovation.

Read More →
Ad Loading...
Photo of businessman's hands resting on files on a desk
F&Iby John TabarMay 27, 2026

Focus on the Opening

F&I managers must learn as much as possible about their customers, starting before they walk into their offices. The bulk of today’s consumers expect that, and good results will follow.

Read More →
Photo of a three-seat vehicle back seat
F&Iby Hannah MitchellMay 22, 2026

F&I Reaches for the Sky

The increasingly important profit center continued making gains in the first quarter, according to StoneEagle data, ancillary products proving more popular as consumers hold onto their buys longer.

Read More →
Cover image for a BOK Financial report titled “Timing the market: How avoiding volatility entirely can hurt long-term reinsurance program performance.” The image shows several road construction barricades with flashing amber warning lights lined up in a nighttime work zone. Beneath the image, red text explains that avoiding volatility can mean falling behind inflation and missing market rebounds that drive long-term surplus growth. The BOK Financial logo appears at the bottom right.
SponsoredMay 8, 2026

Don't Let Caution Cost Your Reinsurance Program

For dealer-owned reinsurance entities, avoiding volatility entirely can mean falling behind inflation and missing market rebounds that drive long term surplus growth. Missing just a handful of strong market days can materially impact cumulative returns—an important reminder for long horizon trust and investment strategies.

Read More →
Ad Loading...
Ryan Ruff, The 90/10 Rule, Automotive Training Academy, Sales Series
F&IMay 6, 2026

The 90/10 Rule

In this video, Ryan Ruff explains the rule that elite sales professionals use to turn ordinary conversations into unforgettable customer experiences.

Read More →
Photo of essential oil diffuser on desk next to laptop
F&IMay 4, 2026

Your Office Is Talking

What’s the atmosphere saying about you to your customers? You can make minor adjustments and additions that transform your space into one that creates trust with the people on the other side of the desk.

Read More →
"Effective training ensures the customer’s needs remain at the heart of everything we do. When that is the focus, both sales and profits naturally improve." by Rick McCormick with F&I and Showroom logo and picture of Rick McCormick
F&IMay 1, 2026

F&I Training Fundamentals

How can auto dealerships help F&I managers fulfill their vital role in the most effective ways? Industry expert Rick McCormick shares his insights on the best ways to train these professionals and help them maintain good habits.

Read More →
Ad Loading...
Photo of car tire and the tread mark it left in snow
F&Iby Hannah MitchellApril 29, 2026

Not Just Any Tire Will Do

More consumers and businesses are opting for all-season options for various reasons as safety, sustainability and convenience push practical change.

Read More →