GMAC tries a little tenderness

Jim Henry is a special correspondent for Automotive News.
I was surprised to see that at the end of 2009, about 11 percent of GMAC's outstanding loans had been rewritten or granted an extension.

That means the customer was given more time to pay and/or the loan was rewritten for a longer term at lower monthly payments. Now, more time to pay means a higher interest rate, but GMAC's real upside is that most customers who are granted an extension or a rewrite get caught up. GMAC said in the last three years only about 7 percent of the extended or rewritten loans were ultimately written off as a loss.

By contrast, Ford Credit noted in its annual report that roughly 2 percent or so of its loans were granted extensions. The company said it doesn't break out the eventual outcome of its extensions.

Ford Credit is pretty tough, yeah, but is it better business?