Judge to consider motion for GMAC to take over Chrysler vehicle loans

Chrysler to ask judge to approve GMAC agreement

NEW YORK — Chrysler LLC will ask a bankruptcy judge on Tuesday to allow General Motors Corp’s lending arm to take over making auto loans for Chrysler’s customers and dealers.

Chrysler two weeks ago said its lending arm, Chrysler Financial, would no longer provide vehicle financing. It reached a deal with GMAC Financial Services to be its preferred provider of loans. Chrysler calls the deal essential to its reorganization.

But Chrysler Financial, Chrysler’s previous preferred lender, has objected, saying that it has yet to receive a copy of the agreement and claiming that its consent is required before a deal with GMAC can go through.

GMAC, which provides loans to General Motors Corp. dealers and customers, was saved from failure late last year by $5 billion in federal aid. It’s expected to get additional government funding for taking on Chrysler’s loans.

Under the current agreement, GMAC will supply showroom financing to Chrysler dealers and have the right to exclusively offer certain discounted financing rates to Chrysler customers.

Chrysler did not reveal the specific terms of the agreement and plans to ask U.S. Judge Arthur Gonzales to seal them, along with other documents, at Tuesday’s hearing.