Detroit - General Motors Acceptance Corporation (GMAC) today announced that a settlement agreement has been reached in the litigation regarding dealer financing practices (Coleman, et al. v. GMAC, U. S. District Court for the Middle District of Tennessee).
"The terms of the agreement preserve fair competition while taking new steps to provide GMAC consumers with the knowledge to make the most informed choice for their auto financing," said Greg Merryman, attorney for GMAC. "GMAC will continue to provide its customers with great value and fair treatment. It is a hallmark of our company. We are proud of our commitment to diversity and our dedication to creating an environment that enables our employees and dealers to contribute fully toward the pursuit of total customer satisfaction."
The terms of the agreement include:
- A new contract disclosure that will state: "The Annual Percentage Rate may be negotiable with the Seller. The Seller may assign this contract and retain its right to receive a part of the finance charge." The disclosure will be placed on the front of all contracts near the signature line and will take effect within 180 days of the settlement's approval by the court;
- cThe maximum difference between the APR and the buy rate, for a period of three years following the settlement's approval, will be equal to or less than 2.5 percentage points, and for contracts with more than 60 monthly payments the maximum difference will be equal to or less than 2 percentage points;
- GMAC will contribute $1.6 million toward consumer assistance initiatives for the purpose of improving the education of, and assisting consumers with respect to, credit financing. Contribution recipients will be organizations focused on African American and Hispanic outreach efforts;
- GMAC will implement a new marketing initiative with the goal of reaching out to African American and Hispanic consumers to generate 250,000 pre-approved offers of credit each year for the next five. If the goal is not reached, GMAC will continue until 1.25 million offers of credit have been issued;
- The credit offers will provide eligible consumers with specific dollar amount pre-approval that can be used to finance the purchase of a GM vehicle. Each credit approval will be tied to a special rate purchase offer - where there would be no discretionary dealer finance income as part of the financing contract; and
- There will be no payments to the class members. Attorney fees for counsel of class members are capped at $9 million and expenses are capped at $600,000 -- both amounts must be approved by the Court.
GMAC encourages consumers to take advantage of these terms. In the extremely competitive auto finance industry, consumers have many options including banks, credit unions, and dealer financing. For nearly 90 years, GMAC has helped millions of American consumers buy the cars they want to drive. This settlement will allow GMAC to keep providing these vital services and will further define GMAC as a true industry leader.
Dan McGinn, The McGinn Group
Jim Farmer, GMAC
Mark Tanner, General Motors