Chrysler will let a vehicle financing deal with Ally expire next year.Chrysler is dumping Ally Financial as one of its major vehicle lenders. Chrysler recently informed Ally that it will not be renewing a contract with the lender that is set to expire in April 2013.
Ally, which was formerly GMAC, currently has a contract in place with Chrysler that requires a minimum percentage of vehicles sold with subvented loans, but the Auburn Hills-based automaker announced on Wednesday that it will be searching for a new bank to fill that role. Subvented loans give consumers access to below market interest rates by having automakers pay the difference to lenders.
Subvented loans with Chrysler accounted for about 5 percent of Ally's total U.S. Loans during the first quarter.
The split won't affect other aspects of Ally's business with Chrysler, including wholesale financing, so-called standard rate financing for consumers and leasing.
Chrysler has so far held negotiations with Wells Fargo & Co., Santander Holdings USA Inc., General Electric Capital Corp., U.S. Bancorp and JPMorgan Chase & Co. to replace Ally. Chrysler hasn't said when it will make a decision on the matter.
Ally remains 74 percent owned by the federal government thanks to a $17 billion loan by the Treasury Department.