As GM files for bankruptcy, auto loans stand

06.01.09
By Sarah Beldo

After months of slow decline - and despite receiving government assistance - U.S. automaker GM has filed for Chapter 11 bankruptcy.

But what does this event mean for consumers - particularly the millions of Americans who own GM vehicles?

First of all, if you have an auto loan with GMAC Financial Services, a creditor of GM, the ordinary terms of your loan will stand.

Furthermore, your possibility of obtaining a loan - with a sufficient credit score - remains unchanged. GMAC released a statement saying that it will still provide retail auto loans, wholesale financing, insurance and loan servicing as both GM and Chrysler restructure their businesses.

What about your warranty? Steve Harris, GM's vice president of global communications, told USA Today that car owners' warranties will still be honored. Earlier this year, the government said that it would back GM and Chrysler warranties during the companies' restructuring, in an effort to boost consumer confidence.

Meanwhile, if you are in the market for a new vehicle, the current business climate offers some of the best deals seen in years - if you are willing to take a chance and purchase a GM car or truck.

Art Spinella of CNW Research told the Wall Street Journal that due to GM's struggles, the average incentive on the carmaker's vehicles now stands at approximately $4,200 and could rise to $6,500 in the coming months.

The Journal says that buyers who have a high enough credit score and are not afraid to buy from GM could be substantially rewarded.

"Uncertainty may wind up driving some remarkable deals for consumers willing to take those risks," Paul Taylor, chief economist with the National Automobile Dealers Association, told the newspaper.

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If you are in the market for a new vehicle, the current business climate offers some of the best deals seen in years.