GMAC LLC will no longer have exclusive rights to provide no- or low-interest loans to people who take advantage of General Motors financing incentives, as part of the complex deal that gave the troubled lender billions in federal aid.
The move could reduce the Detroit automaker's dependance on GMAC to provide financing and possibly boost its sales by giving consumers more options for affordable loans.
GMAC, which provides GM dealer and customer financing in addition to home mortgage loans, disclosed the terms of the agreement in a regulatory filing Friday. The lender said the government will get 5 million preferred shares of GMAC paying 8 percent interest in exchange for its $5 billion capital injection to help GMAC avoid bankruptcy.
In its filing with the U.S. Securities and Exchange Commission, GMAC said General Motors Corp. can now offer financing incentives such as zero-percent loans through other lenders under certain circumstances. Some of the restrictions disappear in December 2010 and all of the restrictions will be gone three years later.
GM spokesman John McDonald said the automaker doesn't plan to change its financing incentive agreements with GMAC and hopes GMAC will continue to offer the loans because they have been key to getting more people to buy GM cars and trucks.
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