FARMINGTON HILLS, Mich. — Chrysler Financial, the former financing arm of automaker Chrysler LLC, said Tuesday that it has repaid in full its $1.5 billion in government loans.
The funds used to repay the TARP loans were obtained through the completion of an automotive asset-backed securitization. Chrysler Financial said its original TARP loan contained provisions that increased its costs over time, motivating the company to pay off the loan quickly.
Amid tight credit markets, Farmington Hills, Mich.-based Chrysler Financial secured the Troubled Asset Relief Program, or TARP, funding in January so it would be able to offer more loans to more consumers.
The hope was that by doing so, the increased loan availability would spur more vehicle sales at Chrysler and help keep the Auburn Hills, Mich.-based automaker out of bankruptcy protection.
Chrysler Financial said it used the TARP money to fund more than 85,000 consumer loans for purchases of Chrysler vehicles.
Chrysler Financial served as Chrysler LLC's preferred lender until the automaker filed for Chapter 11 earlier this year and it was replaced by GMAC Financial Services as part of the government-backed restructuring of the automaker.
As Chrysler's preferred lender, GMAC is allowed to provide showroom financing to Chrysler dealers and has the right to exclusively offer certain discounted financing rates to Chrysler customers.
Chrysler Financial continues to offer dealership insurance and financial products to consumers. It has a loan portfolio of $45 billion.