Magazine article American Banker

GM Financial Unit Cuts Loan Rates to 7.7% to Push Remaining '85 Cars

Magazine article American Banker

GM Financial Unit Cuts Loan Rates to 7.7% to Push Remaining '85 Cars

Article excerpt

CHICAGO -- General Motors has slashed to 7.7% the rate at which it will lend money to new car buyers.

Its General Motors Acceptance Corp. finance arm will offer the rate through Oct. 2 in what a spokesman called "one of our biggest marketing efforts in years." The objective: to sell more than 860,000 remaining 1985 model cars and light trucks before the 1986 models begin to arrive on dealers' lots. GM has 1.3 million 1985 models in inventory, but only two-thirds qualify for 7.7% financing.

Asked how GMAC could offer such a low rate, one company official quipped: "Sleight of hand." But Tom Cover, a spokesman on financial matters, explained that GM is subsidizing the program. "It's much like a rebate, except the manufacturer is buying back the rate," he said. GMAC couldn't possibly have offered the rate itself, as it is currently paying about 7.75% for funds raised through the sale of 30-day commercial paper. …

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