Chrysler granted $1.5 billion federal loan
The new arm of Chrysler Financial Services LLC will receive $1.5 billion worth of federal loan, the US Treasury Department announced.
The five-year loan from the country’s bailout funds will be used to accommodate more loans to potential vehicle buyers. The loan, which was a part of the $700 billion Congress fund to rescue financial institutions, is contracted under a flexible interest rate.
Chrysler Financial was not the sole benefactor of the funds. Automotive companies like General Motors and Chrysler LLC were also given emergency loans. GMAC Financial Services, likewise, was also given financial aid.
Chrysler received its $4 billion in federal funding last January 2. The company announced that it will use the money to pursue its current automotive operations. Chrysler Financial received funding after it suddenly backed out of business in August. The said break down in the company’s financial arm cost Chrysler LLC more than 20 percent of its expected sales.
The Chrysler automotive company was not the sole victim of the fell down in the automobile market. Experts agree that a large number of automobile dealers have opted to get loans from commercial banks in order to augment sales deficit.
Authorized dealers of automobile manufacturers have even withdrawn money from cash management accounts. The said panic caused many automobile companies to be incapable of showing good credit standing. This eventually resulted to the rejection of the manufacturer’s loan applications.
Chrysler Financial CEO, Thomas Gilman, said that the company had the same fate. He said that he even sent a memo to their dealers encouraging them to stop withdrawing their management account money.
Chrysler was the first to be given assistance following its 30 percent sale drop in 2008. The deficit was said to be the largest among automobile companies.
Tags: Chrysler, Financial Crisis, Government
This entry was posted on Friday, February 27th, 2009 at 11:51 and is filed under Chrysler. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.