The clarification was needed as analysts believed Chrysler Financial would slowly head for closure, following Chrysler LLC's filing for bankruptcy. According to the restructuring rules of the group, GMAC became Chrysler's biggest lender and now it began taking over its commercial accounts and started receiving marketing funds from the manufacturer to subsidize promotional interest rates on car loans.
"Consistent with the U.S. government's decision to name GMAC Financial Services as Chrysler Group LLC's preferred lender, the level of funding required to support Chrysler Financial's business is significantly reduced," the company said in a statement quoted by Autonews.
Although it confirmed it has the necessary funds to keep writing retail business and meet its current debts, as well as continuing to service its existing $40 billion portfolio, the company refused to disclose its current retail loan volume.
In mid July, Chrysler Financial asked dealers to pay large amounts of money to handle possible loan losses. The financial institution is now asking every dealer for sums ranging from $75,000 to $250,000 as a back-up to cover risks such as early loans payoffs or default of customer loans.
About the same time, Chrysler Financial also announced it has repaid in full the US$1.5bn of Troubled Asset Relief Program (TARP) government loans. The funds had been secured in order to fund around 85,000 consumer loans for new vehicles.
Google News