Ally Financial (formerly GMAC Financial Services) is preparing to originate auto loans that should please any car buyer who has suffered through an upside down loan. The Detroit Free Press reports that Ally will offer car loans in America’s five most highly populated states that will enable borrowers to sell their cars back to Ally after four years at a price that will at least cover the remaining loan balance.

Buyer’s Choice starts Tuesday

General Motors and Chrysler dealers in California, Florida, Illinois, New York and Texas will begin offering Ally Financial’s Buyer’s Choice auto loans beginning Tuesday, Nov. 1. Loan terms will range from 60 to 84 months, and borrowers will have the option of selling the car back to Ally after 48 months. If consumers believe they can get a better sale price for the car on their own, they may still exercise that option, said Tim Russi, Ally Financial’s North American executive vice president of operations.

“This tries to appeal to the consumer who really likes having an arrangement where he owns the vehicle, but still wants to know its market value when he considers replacing it,” Russi said.

New loans, more leases

Many industry experts believe that the potential loss Ally could take with this new type of car loan would force the financier to issue fewer leases. Russi countered that by setting repurchase price in advance, Buyer’s Choice will protect Ally from the problems inherent in most conventional leases.

Ally Financial’s credit rating has improved twice this year, which Standard & Poor’s notes as a good sign. This comes despite the fact that the company’s residential home mortgage arm continues to lose money. Overall, the company reported $113 million in second-quarter profit, the sixth straight profitable quarter since the financial crisis. An initial public offering is coming soon, a sign that the company is optimistic about the future.

“Ally Buyer’s Choice is a true differentiator in the market and provides great flexibility and choice for consumers,” said Russi. “Ally is committed to bringing industry-first products to market that offer consumers more choices and help dealers sell and service more vehicles.”

When Ally Financial filed for an IPO