GM’s financing arm recently made a decision to give loans only to consumers with the best credit.  This is due to the tightening of the credit market and unstable economy.  Only car shoppers who have a credit score of at least 700 will qualify to get a loan for a car.

The state of California has made it known that it is against the GMAC’s decision, claiming that it will rule out 40% of Californians from getting a car loan, which will result in many dealerships having to file for bankruptcy.

The president of the California Auto Dealer Association wrote to GMAC CEO Alvaro de Molina warning that these strict guidelines would result in disaster for dealerships.  GM already suspects that dealer profits will drop 18% for the year.

Although California’s dealers have been the first to point it out, the new lending rules by GMAC will most definitely have an impact all over the country.  In fact, many consumers will be holding onto their current cars and purchasing used car warranties, because they won’t be able to get car loans.