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dealer credited back to GMAC a portion of the dealer finance
income.
A retail customer's RISC seldom carried an interest rate
below GMAC's buy rate when the motor vehicle was not covered by a
retail rate support program.6 See infra pp. 10-19 (discussing
retail rate support programs). In that case, the fair market
value of the RISC was lower than the face amount of the RISC.
GMAC paid or credited the independent GM dealer less than the
face value of the RISC (so that the effective yield to GMAC on
the RISC equaled the GMAC buy rate). This reduced the income the
independent GM dealer received on the sale of the vehicle.
III. Incentive Programs
A. GM Incentives to Independent GM Dealers to
Purchase/Sell GM Vehicles
In 1985, there were numerous programs in effect that GM had
established to provide financial incentives to independent GM
dealers to purchase and sell more GM motor vehicles (dealer
incentives).
6 This was because if the RISC carried a below-market
interest rate the independent GM dealer forwent money on the sale
of the car. This money was "lost" because the independent GM
dealer credited the face value of the RISC towards the retail
customer's purchase price of the vehicle even though the RISC
carried a below-market interest rate (i.e., the RISC's fair
market value at the time of purchase was less than its face value
at the time of issuance). Thus, the independent GM dealer
forwent the difference between the face value and fair market
value of the RISC.
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