Chrysler Financial Lifts Rates

Chrysler Financial raised some of its lending rates to vehicle buyers Tuesday an average of more than a full percentage point, according to a number of Chrysler LLC dealers.

The move likely will prompt the dealers to seek financing for some of their customers elsewhere, such as from credit unions. It is a sign that Chrysler Financial is running out of the $1.5 billion in government funds it received in mid-January to boost car sales, said a person familiar with Chrysler Financial’s operations.

Spokeswomen for Chrysler LLC and Chrysler Financial, the car maker’s independent lending arm, declined to comment.

The loan rate increases, which varied slightly by region, could affect anyone who buys a vehicle from a Chrysler, Dodge or Jeep dealership.

However, those who take advantage of the company’s Employee Pricing Plus Plus campaign won’t be affected since that program is financed by Chrysler itself, not the finance company. The program offers steep discounts and 0% financing to some customers. The deal is expected to end April 30.

Tuesday’s rate boost means other customers, even those with top credit scores, likely will pay higher loan rates. “Short term, it’s probably going to mean the banks and credit unions are going to be more competitive than Chrysler Financial,” said a dealer who declined to be identified.

Chrysler Financial’s grading system factors in such variables as the length of a customer’s credit history and amount of outstanding debt, dealers said. It has tightened its lending practices in the past year, often taking only the safest customers.

Sourced via online.wsj.com