BIRMINGHAM, AL - Regions Financial Corp. is the latest finance company to cut its indirect lending platform. Dealers recently learned that Regions Financial Corp. eliminated its loan program for at least 2,600 dealerships across the nation. The news broke the same day GMAC Financial Services said it was tightening its lending criteria, and five days before Chase Auto Finance said it changed its lending standards.
A spokesman for the Birmingham, Ala.-based Regions Financial Corp. said the company will still make car loans, but customers will have to apply directly with the company.
GMAC told dealers it will begin limiting purchases to contracts with a credit score of 700 or above. It will also restrict contracts with higher advances and longer terms. This means some consumers will no longer be able to borrow above the dealer’s invoice price, and that some borrowers will be restricted to loans of no more than 60 months.
Chase Auto Finance recently told dealers on that it will ask borrowers for higher down payments and more documentation for loans. The finance unit has already said it will not accept subprime loans longer than 72 months, and has capped all new-vehicle loans at 84 months.
Recent financing statistics also reveal a tightening credit market, with negative-equity trades dropping in September to their lowest point in five years (25.92 percent of the mix) and cash transactions rising to their highest point since October 2007 (29.4 percent), according to the Power Information Network.