Jul 22nd, 2008 by Liz Opsitnik
The Wall Street Journal recently reported that Chrysler Financial’s bankers are scrambling to avoid higher borrowing costs when the unit rolls over about $30 billion of short-term, car-loan-backed debt next month, reports the Detroit News.
Chrysler CEO Bob Nardelli said that isn’t so. Chrysler’s financing arm is not in danger of losing the ability to offer consumers low-interest loans, he said to the company’s employees on Monday.
Analysts say that if Chrysler has to pay more to acquire money to lend to its customers, the company may not be able to offer special rates on auto loans to remain competitive in a slow auto market.
The credit review process under way is nothing out of the ordinary, Nardelli assured Chrysler staff.
“As is customary for many auto finance companies, this renewal process takes place every year,” he wrote in an e-mail sent to employees and obtained by The Detroit News. “We will continue to offer competitive financing and lease options for our customers and dealers.”
Automakers’ lending arms, including Chrysler Financial, may have to pay higher interest rates for funding as credit markets have tightened and banks are more reluctant about debt backed by car loans and leases, as defaults continue to rise.
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