Chrysler Financial Resorts to Extortion to Eliminate Excess Dealers

Robert Farago
by Robert Farago

Life inside Chrysler Financial hasn’t been a bowl of cherries ever since Cerberus coveted the auto lender’s carnacopia of profits. And then the auto bubble burst, but good. Cerberus sidled sideways, sidestepping the pile of excrement that their investment in “new” Chrysler had become—but hanging onto its raison d’etre: the financial side of the biz. Our inside sources report there’s a certain . . . Captain Queegness to the company these days. Or is that Don Corleone? No matter how you look at CEO Tom Gilman, the industry vet is taking no prisoners. We’ve been reporting for some time that GM has been using GMAC to force dealers out of biz, though usurious rates and excess hoop-jumping. No surprise, then, that Chrysler Financial is hoeing (ho’ ing?) the same road. Automotive News [sub] reports that “Chrysler Financial is asking many of [dealers] to pay large sums to handle possible loan losses. The money — ranging typically from $75,000 to $250,000, dealers say — is designed to cover such risks as early loans payoffs and defaults of consumer loans.” Too right too! Early loan payoffs are . . . un-American! Loan defaults, however, are the new zero percent financing.

Robert Farago
Robert Farago

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  • Superbadd75 Superbadd75 on Jul 13, 2009

    Credit card companies are dropping peoples' limits to their current balance, raising interest levels to ridiculous levels, and so on. This is the auto finance company's way of getting the same result. I don't think it's a way to necessarily drop dealers, it's a way for Chrysler Financial (the three-headed dog) to F over their biggest customers. Their profits are way down, and by George someone's going to make up for it. If people aren't buying cars, then it's not going to be consumers, so the dealers must pay.

  • No_slushbox No_slushbox on Jul 13, 2009

    Pre-payment risk is an issue when making a loan. Commerical loans, sub-prime mortgages, and even some auto loans carry prepayment penalties. Given the abuse that happens in the typical dealers F&I office why are we supposed to care again about the lending to dealers? Covering the screwing over of all taxpayers by the auto bailout is something that must be covered in the interest of The Truth About Cars. On the other hand, if I wanted to hear dealers being charged market rates, as opposed to subsidized money losing rates, described as "usurious" I would pay for [s]Dealer Whining Weekly[/s] Automotive News. If the dealers don't like the terms borrow the money from someone else other than Chrysler Financial - Oh wait, that's right, lending to a Chrysler dealer with a loan collateralized by Chrysler products is a horrible risk that not many other financial institutions will take at any rate. If Chysler Financial makes stupid loans at inappropriate rates it's just going to end up costing taxpayers more money.

  • Speedlaw Speedlaw on Jul 13, 2009

    The car business is like the movies. We all buy the fantasy, but are shocked, shocked (!) at the hardball and borderline dishonest business dealings in the process of getting there. I have as much sympathy for most dealers as I do the record industry. They both run controlled markets (till recently) with content doled out on their terms; to our general disadvantage, witness the 50K Camaro.

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