Should You Finance a Chrysler Through GMAC?

One of the more confusing aspects of the Chrysler restructuring came when it was announced that Chrysler Financial will dissolve and GMAC will be responsible for in-house new vehicle financing. If you have a loan currently with Chrysler Finance should you begin wringing your hands? The answer is no.

I did a little hand wringing when the Chrysler restructure was announced. In March I purchased a Dodge Dakota using the 0% financing option through Chrysler Financial. While I knew my loan would remain in effect, I was more concerned about the potential aggravation of having the 0% renegotiated to an actual percentage or having to contend with additional paperwork to maintain my 0% position. Both fortunately are not true.

If you own a Chrysler product with a Chrysler Financial loan or if you are thinking about a new purchase, here is the current finance skinny.

First off, you don’t have to participate in a Chrysler loan program. Obviously, there are other financial institutions you can get loans from. However, to get the best deal you may need to go with in-house financing. Things are also pretty much remaining in the family so to speak. With the closing of Chrysler Financial, GMAC will take over as the preferred lender to buyers of new Chrysler cars. GMAC is owned by GM and Cerberus, the private equity group which owns Chrysler.

GMAC will not inherit Chrysler Financial's book of existing auto loans and leases, but will offer only new loans. If you currently have a loan with Chrysler Financial it will remain status quo.

As part of the deal, GMAC will be now be able to offer new Chrysler customers certain discounts.

The federal government said it would provide additional funding support to GMAC to ensure continued financing to Chrysler dealers and consumers while the auto maker restructures in bankruptcy court. The size of the additional federal funds isn't yet known. After it was recently re-certified as a bank, GMAC got $5 billion under the Treasury's Troubled Asset Relief Program (TARP).

So, with a little more information now on the details of the Chrysler Financial/GMAC switch, what do I think the future will bring? I think it was a good move for both consumers and dealers. The change is going to help open credit lines and make more money available for both customers and dealerships. I think it will also create the dawning for the reinstitution of plentiful leasing deals.

When Chrysler starts rolling out a bunch of new post bankruptcy incentives in the next couple of weeks, partake, and don’t worry about in-house financing if you choose that option.