Dealerships of Chrysler Group were informed last Monday that the carmaker has reached an agreement with Santander Bank to offer financing to customers who are unable to qualify for prime loans.
With this move, Chrysler intends to broaden its customer base and add momentum to US sales gains. The agreement, with Santander Consumer USA Inc., is effective starting Thursday.
The bank, the US arm of the Spanish banking giant Banco Santander, will extend loans to customers with nonprime credit scores of 650 or lower. The arrangement is also being subsidized by the government; however, company officials have declined to indicate the size or nature of the investment.
Chrysler officials disclosed that about 22% of Chrysler customers fall into the credit range Santander will cover.
Kathy Graham, a Chrysler spokeswoman, said that Santander specializes in this credit market. She underscored that the company knows how to finance it but that it doesn't do prime lending. She also clarified that this is not a liquidity issue.
Due to this new arrangement, Chrysler said it could add 2,000 sales per month. About 50% of Chrysler dealers use Santander for used-car financing.
Chrysler officials said that Santander can offer loans at a 30% savings compared with other lenders. Doing so could potentially save customers as much as $3,000 over the life of the loan.