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Chrysler Financial Plans to Make a Come Back

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On: Wed, Jul 21, 2010 at 10:57AM | By: Sherry Christiansen

Chrysler Financial Plans to Make a Come Back

After Chrysler and GM went bankrupt last year, GMAC (currently a company called Ally Financial Inc.) stepped in to take over for Chrysler Financial as the main lender for all of the Chrysler dealerships.

In recent auto news, Chrysler Financial is now considering a come-back in the lending industry with a primary goal to lend to consumers with “near-prime” credit, according to an anonymous source that talked to the Bloomberg News recently.  

“There's always a place for another lender,” said Maryann Keller, president of Maryann Keller & Associates in Stamford, Connecticut. “Chrysler Financial has to come up with a business plan that identifies who its dealer partners are and how the company will raise capital.”

In the past, Chrysler Financial operated as a “captive finance unit of Chrysler LLC” and not only offered retail loans, but also extended financing to dealerships that used the money to purchase inventory.

According to the Bloomberg news, Chrysler Financial was recently in contact with dealerships to find out how much interest there may be. One financial spokesman from Chrysler refused to comment on the future plans of Chrysler Financial.

“Chrysler Financial remains focused on successful collections from its legacy portfolio of auto loans and continues to evaluate new business opportunities, including but not limited to originating new receivables,” said a Chrysler spokesperson.

The Michigan automaker filed bankruptcy last year and sold its assets to the new Chrysler Group LLC which is now managed by Fiat. At the time of bankruptcy used car sales were down which lowered the assets that backed up loans for Chrysler Financial resulting in the company having trouble raising capitol.

The Obama administration ordered that GMAC, now Ally Financial Inc, take over as the primary lender for Chrysler dealerships as part of a restructure plan after the company file bankruptcy. Ally currently finances over 40% of Chrysler’s auto sales to retail customers and 76% to its dealers.

Chrysler Financial plans to specialize in sub-prime borrowers with “spotty credit,” lending to those who have a good history of paying on their past auto loans. In today’s market, sub-prime lending is a great niche and the company has a track record of lending to those borrowers.


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