Inventory Floor Planning Solutions

JAMIE LAREAU

AUTOMOTIVE NEWS

MAY 5, 2009 – 5:32 PM ET

DETROIT — GMAC Financial Services is extending through May a policy that allows dealers to avoid making certain payments on aging inventory.

GMAC had suspended dealers’ so-called curtailment payments in April.

“That’s one of our means to help alleviate stress on dealers while they also reduce their inventory on aging vehicles,” said Sue Mallino, a GMAC spokeswoman.

A curtailment is a payment dealers must make on old inventory. For new vehicles, the curtailment normally would be assessed on all 2007 and 2008 model vehicles that dealers have financed for more than 18 months. The curtailment also would cover used vehicles from 2007 and 2008 that dealers financed for more than six months.

“For aging inventory, we began to acquire a percentage of the financing to be paid down, and that’s what’s known as a curtailment,” Mallino said.

That percentage can be up to 10 percent of the vehicle’s outstanding balance. So if it’s a $10,000 car, a dealer might pay $1,000 a month for 10 months and pay it off, Mallino said. The time frame depends on how much financing is still owed.

Source: Automotive News

Technorati Tags: floor plan financing, Floorplan Financing, GMAC Financial Services