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reimburse GMAC for the amount GMAC paid the independent dealer in
excess of the RISC's fair market value at the time of purchase.
For RISC's executed before 1985, if the retail customer
prepaid the RISC held by GMAC, GMAC returned (or credited) to GM
a portion of the retail rate support payment that GM had
previously paid (or credited) to GMAC.
Beginning in 1985, GM and GMAC began to take anticipated
retail customer prepayments into account in determining the
amount of the retail rate support payments GM paid to GMAC. This
reduction in the amount of the retail rate support payments was
actuarially determined.
During 1985, GM reduced the retail rate support payments it
made to GMAC by 7 percent to take account of anticipated
prepayments. In 1985, if a retail customer prepaid an RISC, GMAC
was not obligated to return to GM any portion of the retail rate
support payment GMAC received from GM on that RISC because
anticipated payments were taken into account in determining the
amount of the retail rate support payments.
GM made retail rate support payments to GMAC as an up front,
lump sum payment. This treatment was similar to the treatment of
direct rebate programs--car divisions charged the whole amount to
their sales allowance budget.11 GMAC wanted the retail rate
11 From 1985 to the present, the retail rate support
(continued...)
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