Ally Financial is launching a new kind of loan that's like an ordinary auto loan in every respect except one: It comes with an option allowing the customer to sell the vehicle to Ally at a guaranteed price 48 months into the loan.
"What's new is the certainty of the value of the vehicle," said Tim Russi, executive vice president of North American Operations for Ally. He said the preset price mimics the residual value on a 48-month lease.
Ally calls the program Ally Buyer's Choice. It's already in the pilot phase with a few big General Motors and Chrysler Group dealerships in California, Florida, Illinois, New York and Texas, Russi said. The pilot is scheduled to start rolling out to all dealerships in those states, starting Nov. 1. The company plans to roll it out nationwide eventually.
Russi said that as with any other loan the customer could sell or trade in the vehicle at any point. But the preset price applies only in the 48th month of the loan. "For the dealer, the OEM and the consumer, that 48-month point is critical. That's the time consumers start to look at 'How long do I want to keep my vehicle?'" he said.
Eventually, Ally may vary the program to offer different intervals for the option-to-sell clause, Russi said, adding, "We'll see where it goes."