Chrysler Financial may resume large-scale loans to consumers and dealers

Article by Christian Andrei, on August 29, 2010

A source said that Chrysler Financial Co. could resume large-scale loans to consumers and dealers after it lost its status last year as the main lender to its namesake dealers last year. The source added that Chrysler Financial wants to begin with loans to buyers with near-prime credit and is seeking to raise capital.

The company, which may be changing its name soon, also asked dealers about financing their inventory, according to several retailers. This change in strategy indicates how Chrysler Financial, which was described to be not viable a year ago by President Barack Obama, is benefiting from the rebound in used-car prices.

From the lowest in more than 13 years in December 2008, prices have gone up to the highest on record in May.

Since its collateral is now more valuable, it's likely to be able to raise money and accelerate lending. Maryann Keller, president of Maryann Keller & Associates in Stamford, Connecticut, said, "There's always a place for another lender."

She said that what Chrysler Financial needs to do now is to create a business plan that recognizes its dealer partners and is able to determine how the company will raise capital.

The company previously operated as a captive finance unit of Chrysler LLC, giving loans to dealers to purchase inventory as well as financing sales and leases to consumers.

GMAC replaced Chrysler Financial as the primary lender for Chrysler dealers when the automaker entered bankruptcy last year.

Since that time, the company has mostly collected payments on outstanding loans. The source also said that Chrysler Financial, which has a loan portfolio of $26 billion, issued less than $100 million in loans this year.

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