Chrysler Financial Getting $1.5B U.S. Loan

The Treasury Department announces the help for the automaker's lending arm.
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Chrysler Financial, the automaker's lending arm, will receive a $1.5 billion, five-year loan from the federal government, the Treasury Department announced today.

The U.S. already has agreed to lend up to $6 billion

General Motors'

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lending unit, GMAC.

The funds will come from the government's original $700 billion in TARP money.

Chrysler Financial agreed to limits on executive compensation as part of the deal, reported. Chrysler saw its auto sales fall more than 50% in December.

"The special purpose entity created by Chrysler Financial will issue warrants to Treasury in the form of additional notes in an amount equal to 5% of the total size of the loan. The additional notes will vest 20% on the closing date and 20% on each anniversary of the closing date and will have other terms similar to the loan," the Treasury release stated.

This article was written by a staff member of