(Recasts, adds details on loans, company and analyst comment, background on sales and byline)
By Poornima Gupta
DETROIT, Oct 13 (Reuters) - GMAC, the finance company affiliated with General Motors Corp (GM.N), said on Monday it would pull back from riskier and longer-term auto lending in response to tight credit conditions that has limited its access to funds.
GMAC said it would be more conservative in extending car loans, restricting them to U.S. consumers with good credit and to shorter terms.
“The changes include limiting purchases to contracts with a credit score of 700 or above,” GMAC said in a statement. “These changes in pricing and underwriting are related to the current market environment, which has reduced access to funds and increased the cost of funds.”
The company said it expects the restrictions to remain in place until credit markets stabilize.
GMAC also said it has increased the rate it charges car dealers for providing standard auto financing by 75 basis points.
A GMAC spokeswoman said the company was taking the steps because of tough economic conditions.
“In general, it’s clear that the U.S. consumer is continuing to feel stressed,” she said. “What we are seeing in the marketplace today is unprecedented.”
GMAC’s wholesale auto finance business is not affected by the changes.
The lender is 51 percent owned by Cerberus Capital Management, with the remaining 49 percent owned by GM.
Detroit-based GMAC lost $2.48 billion in the April-June period, hurt by losses at its mortgage lending unit ResCap and write-downs on the value of leases for sport-utility vehicles.
GM and Cerberus, which also owns Chrysler LLC and its captive finance firm, have both been hit hard by the slump in U.S. auto sales and tighter credit markets.
U.S. auto sales for September sank to a 15-year low, with automakers reporting that the financial crisis had made consumers less willing to make big purchases and left many remaining car shoppers unable to secure financing.
Industry executives and auto analysts have said they are not seeing any rebound in U.S. auto sales so far in October.
U.S. industrywide sales this month were off to a poor start, said Citigroup analyst Itay Michaeli.
“Our initial channel checks suggest an October (seasonally adjusted annualized rate) of 12 million units, which would be the lowest SAAR of 2008,” he said in a note to clients, adding that vehicle sales volume is expected to be down as much as 30 percent this month.
The president of Ford Motor Co’s (F.N) Americas operation said on Monday that U.S. auto industry sales were running at about the same level as they have the past two months.
Reporting by Poornima Gupta; Editing by Bernard Orr