General Motors’ captive finance arm, GM Financial, will begin offering prime risk loans at some GM dealers in early 2014. Offering retail financing for prime borrowers — the largest segment of the lending market — is the “last remaining hole” in the financial company’s product set, according to GM Financial CEO Dan Berce.
The GM operating unit will first offer prime lending at a small amount of GM dealerships where it has already established commercial lending agreements (to finance dealers’ inventory purchasing operations). From there, the captive finance arm will assess “the opportunity or need” to offer prime risk loans in all GM dealers.
For reference, GM Financial rolled out its commercial lending services for General Motors dealers in April 2012 and had signed 155 stores to the program as of March 31, 2013, or roughly 2 percent of the 7,871 total GM dealers in the United States.
The GM Authority Take
This represents yet another welcome tactic in GM’s quest to close the gap in the GM Financial product portfolio, joining captive finance operations in Europe.
On a related note, GM Financial’s expansion into prime risk loans for consumers will very likely result in less prime GM-related lending business for Ally Financial — which at one point was GM’s own captive finance arm. Isn’t it interesting how the tables have turned?
Comments
would love an explanation from an expert as to why they didn’t offer prime loans before. there’s obviously good reason but it’s a nuance of the auto loan market that eludes me. would be interesting to know.
Good for GM. It gives it gives more options for the buyer. We have used GM financial services in the past, GMAC, and wert pleased. There was also a symbiotic relationship with our Credit Union making payments easy.
Wanting and needing a vehicle is one thing, but the financial stress is overwhelming for some. An easy stress free transaction is a plus for future purchases if a product.
But as we have found out recently… Bad loans should be guarded against as they weaken the entire industry. Diligence or crash and burn.