Monday, August 4, 2008

Chrysler Finance Unit Fails To Renew Some Funding

If you have cash, it is going to be a great time to buy a car.

Chrysler Financial was unable to renew all of $30 billion in short-term debt after a month of high-strung negotiations with 22 banks, coming up $6 billion short, WSJ reports.

The refinancing amounted to nearly half of the $70 billion in working capital of the finance unit of Chrysler LLC and was used to help fund car leases, retail car loans and loans to dealers called floor-plan loans.

Further, the $24 billion it raised came in at 1.1 to 2.25 percentage points above Libor, making it harder for Chrysler to offer cars to consumers at attractive terms.When they were raised a year ago the interest rate on different pieces of the $30 billion funding ranged from 0.3 percentage point to half a percentage point above the London interbank offered rate.

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