Will Chrysler Bankruptcy Affect Chrysler Financial Customers

The recent Chapter 11 bankruptcy filing may have customers of Chrysler Financial worried about their loans.

Chrysler bankruptcy

Here at Auto Credit Express, most of weren’t surprised by the bankruptcy filing of Chrysler LLC yesterday. That being said, it certainly isn’t pleasant having one of our neighbors (Chrysler headquarters is just a mile away from the ACE offices), as well as one of the three domestic automakers, have to go through a bankruptcy filing in order to remain a viable business.

But while much has been said about Chrysler’s current situation, very little has been mentioned about Chrysler Financial, the automaker’s captive finance company, other than to point out that GMAC, also partly owned by Cerberus (the investment group that purchased Chrysler from Daimler) will immediately begin financing Chrysler’s customers, as well as eventually take over the financing of vehicles on dealer lots (called floorplanning).

GMAC

Chrysler Financial, it turns out, is in financial straits just as dire as that of Chrysler, itself. And while both Chrysler Financial and GMAC applied to the government for bank status (thus allowing them access to TARP funding), only GMAC was granted this status.

So while GMAC has returned to lending as usual (usual being a relative term given the current economic circumstances), Chrysler’s erstwhile finance arm has been fighting the good fight with one hand tied behind its back – hardly acceptable odds in today’s economy. So with Chrysler Financial on the ropes, the only choice for an emerging “new” Chrysler is, guess what (and you get only one guess)? So where does this situation leave current customers of Chrysler Financial?

Current Chrysler Financial customers

Although Chrysler Financial has yet to issue any press statement, both Chrysler LLC and GMAC have stated that the following will occur:

GMAC will immediately begin to service new Chrysler customers at the retail level. This means that when you finance a new Chrysler through a Chrysler, Dodge or Jeep dealer, the captive lender will be GMAC (through a branded lender for dealers backed by GMAC).

GMAC will immediately begin offering floorplanning financing to all CDJ dealers currently with Chrysler finance.

Finally, Chrysler Financial will continue to service its portfolio. This means that for all current customers of Chrysler Financial, it will be “business as usual.” You will make your payments to CF just as you have in the past.

The future

Although Chrysler Financial customers will see no changes in the near term, it’s difficult to whether or not things may change in the future. If Chrysler has so little faith in the company that it’s partnering with GMAC, then pushing their erstwhile financial partner off the stage can’t be a good sign (especially if you’re a CF employee).

But regardless of the fate of the company, Chrysler Financial customers can rest assured that either CF or another lender (to be named later) will continue to service their car loan.