Dealers find it harder to get credit for customers

The consumer finance arm of General Electric Co. warned this week that the days of easy financing for big-ticket home products is over for customers who have marginal credit.

GE Money sent a letter to dealers of manufactured goods such as doors, windows and landscaping materials that its consumer lending policies were tightening in response to the nationwide credit crunch.

GE Money, with $200 billion in assets, finances consumer purchases of products made or distributed by Minnesota-based Marvin Windows, Renewal by Andersen, landscape supply firm Shemin Nursery and scores of heating and cooling contractors. Some Marvin Windows dealers said they received GE's letter this week.

GE Money joins several auto lenders who began pulling back on credit extended to marginal customers this month. AutoNation, the country's largest car dealership, says that a third of car shoppers who have good credit suddenly can't get financing.

GE also has tightened dealer financing arrangements for boats, motorcycles and recreational vehicles, said Polaris Industries CFO Mike Malone, who says he is concerned about what might come next.

GE officials said the company must tighten credit for big-ticket home products to keep its business viable.

"GE has to protect its portfolio. They want to be here when this crisis ends," GE regional sales representative Vernette Barnes said. For the next year, she said, the company will focus on serving "the cream-of-the-crop customer."

Barb McMickle, sales director of Scherer Brothers window and door division in Hopkins, handles the financing for purchases of Marvin Windows. "I did talk to GE and they said they are turning down more people," McMickle said. "Luckily, we have not seen that yet."

Marvin Windows tends to attract customers in the Twin Cities metro area who have high incomes or solid credit, McMickle said. The windows can range from $1,000 for a single-crank model to $50,000 for a large picture window. Some customers like the option of financing through GE Money, which has offered six months of interest-free financing and no minimum payments, McMickle said.

Customers who have spotty credit histories could find it much harder to secure GE loans they once took for granted.

"We probably would not buy them because we are looking long-term," Barnes said. "It's becoming harder and harder for consumers to not only obtain credit, but to pay down their credit. So delinquencies are going up."

GE Money terminated its secured lending program in January, after mortgage delinquencies and foreclosures spiked in California, Florida, Arizona, Ohio, Michigan and Nevada. Barnes said the credit problems seen elsewhere are only beginning to hit the Midwest.

Polaris, the Medina-based ATV, motorcycle and snowmobile maker, generally uses HSBC or GE Money to help dealers finance 40 percent of their consumer purchases.

"GE expressed a commitment to our dealers and is assuring us that the power-sports business is something they want to continue to do. But they have been making changes, and that is disconcerting," Malone said. "We are looking at contingency plans if things change," he added. "It's a big deal for us."

Analysts asked Polaris executives this week about a potential fallout from GE's credit squeeze. Malone said later that it hasn't had an impact yet, but the worry is that the situation could change "in one or two months -- or two weeks."