“Leasing is big in the Detroit Metro area where we are, and in New England, but at the end of August (2008), Chrysler Financial exited leasing. Ally has been a godsend for us.”
Before Chrysler Financial quit leasing, it got burned by the falling value of pickups and big SUVs coming off leases. Ally, the former GMAC Financial Services, and many other auto lenders cut back on leasing in late 2008 and early 2009.
Ally started getting back into leasing in the second half of 2009, as credit eased and used-vehicle values rebounded. Leases made up 10 percent of Ally's U.S. originations in the second quarter, up from almost none in the year-ago quarter.
In early August, Ally lowered its threshold for approving leases for both Chrysler and GM dealers. That made customers with slightly more risky credit scores eligible.
Dealers said that Ally lowered the lowest eligible FICO credit score for leases to 620 from around 660. That's just above the cutoff for subprime, which is generally pegged around 600.
Greg Heinrich, who represents Chevrolet dealers on the GM National Dealer Council, said dealers have been advocating a return to leasing, but first Ally and other auto lenders had to secure their own finances.
“Credit just wasn't available. As time goes by, it [leasing] continues to get better on more models,” said Heinrich, who owns four GM dealerships in Nevada
“Having leasing where we didn't have any leasing is an improvement. They (Ally) have to make sure they go about it prudently. It's good. It's baby steps, but that's understandable.”