Chrysler Financial receives federal loan, automaker to offer new financing deals
Chrysler Financial gets federal loan, automaker to offer new financing deals to boost sales. The new loan will be backed by the car loans that Chrysler Financial makes.
Chrysler LLC announced new sales incentives Friday following the U.S. Treasury’s decision to lend the automaker’s financing arm $1.5 billion, a much-needed cash infusion to finance new consumer auto loans.
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Chrysler Financial received an initial $100 million Friday, a U.S. government official said. The money is coming from the government’s $700-billion financial bailout fund.
“This funding will better position us to withstand the current economic challenges until funding becomes available through more traditional commercial sources,” Thomas Gilman, Chrysler Financial vice chairman and CEO, said in a statement.
The loans follow the Treasury’s move to lend up to $6 billion to GMAC. The loans to Chrysler Financial are in addition to the $4 billion Chrysler’s automotive business received in federal loans. Cerberus Capital Management, which owns a stake in GMAC, is a majority owner of both Chrysler and Chrysler Financial.
Chrysler executives have said that a lack of loans and available credit were severely curtailing sales, which were down more than 50% in December.
Chrysler wasted no time in announcing sales incentives following the Treasury’s announcement.
The automaker is offering zero-percent financing on 11 vehicles for up to five years on selected vehicles.
The company will have new advertising next week that highlights the zero-percent financing offer, the company said.
“Our dealers have been telling us that maybe 20% of the customers or 25% of the customers that they’ve had have not been able to buy cars only because of restricted credit,” said Jim Press, a Chrysler president and vice chairman. “This really opens the door and we think will have a very positive impact on our sales.”
Dealers, who have been struggling to find vehicle financing for their customers, were happy to hear the news.
“It is amazing what I think the difference that it will make,” said Bill Golling of Golling Chrysler Jeep Dodge Inc. in Bloomfield Hills. “I think Chrysler Financial financed something like 3,000 cars” last month “when they normally do 50,000. Don’t you think that makes a little bit of an impact?”
Chrysler said customers with credit scores of 620 will now be able to get loans.
“It’s a damn good thing for the dealers,” Sheldon Sandler of Bel-Air Partners, a New Jersey consulting firm that specializes in automotive retailing, said of the loan. “They need support to sell cars. One of the big problems that’s been going on is that they sell the car but can’t get the paper for it.”
The new loan will be backed by the car loans that Chrysler Financial makes.
It seems to make more sense then retuning the car that and the dealer being stuck with a used car anyway, Like Hyundai.
There used to be a “Unemployment Iinsurance” you got opt to have included in your loan, but that is long gone, especially here in Michigan. No explaination needed why it’s no longer around.
The Hyundai deal comes with a lot of hidden text and basically only covers the negatitve equity in the value of the vehicle loss. It makes good marketing sense, but is not a practical alternative to a buying a vehicle soley on this benefit. If you think about it, this is why leasing can be a bad idea, especially in a market down turn when people start losing their jobs. Start racking up late payments and next thing you know you can’t get a auto loan when your lease matures. Where as if you purchase the car ($20 or $30 more monthly over a lease pymt) you can sitll keep the car your struggling to make payments on until it is paid off – giving u a chance.
If they can’t buy a new car let them keep the old one, What we are trying to do is put the car in front of the house with the forcloser sign they won’t be able to pay for either, What waste of taxpayers’ money!!! Liquidate the Company already!! This cash infusion will only delay the ultimate outcome!
Here is a idea,… how about a “No Worries Loan”? If ya get laid off, take the payment that you cant make onto the other end of the loan? That would get the consumer conference up enough to go out and buy a new car/truck. It seems to make more sense then retuning the car that and the dealer being stuck with a used car anyway, Like Hyundai.
Chrysler Financial gets federal loan, automaker to offer new financing deals to boost sales. The new loan will be backed by the car loans that Chrysler Financial makes. Chrysler LLC announced new sales incentives Friday following the U.S. Treasury’s decision to lend the automaker’s financing arm $1.5 billion, a much-needed cash infusion to finance new consumer auto loans.
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