About 2,500 of Chrysler LLC's roughly 3,200 U.S. dealerships have signed up with GMAC Financial Services, which will be their new captive finance company after the automaker emerges from bankruptcy, Chrysler executives said late last week.
But some dealers are holding out, saying the terms of the retail finance agreement with GMAC could cause them problems later.
The National Automobile Dealers Association warned dealers last week that the GMAC agreement may require them to personally guarantee retail sales contracts if the loans go bad under conditions such as fraud. If the borrower defaults, NADA said, the dealer could be personally liable for the loss.
GMAC did not respond late last week to a request for comment.
Eric Chase, a dealer attorney in Florham Park, N.J., called the GMAC document "onerous."
"GMAC has been demanding of certain of my clients: 'Give me a mortgage on your house,' " Chase said. "I can't in good conscience say, 'Sure, go ahead and sign your life away.' If everything bottoms, you could lose everything you worked your whole life to build."
An East Coast dealer who asked not to be identified said he had not signed the agreement because of the personal-guarantee provision.
"I'm on personal guarantee with Chrysler Financial," he said. "If I sign a personal guarantee with GMAC, and you tell me tomorrow I'm no longer a dealer, why would I want to get tangled in more personal guarantees?"
The agreement with GMAC will enable Chrysler dealers to offer promotional rates on auto loans. Chrysler Financial suspended retail financing with special rates after Chrysler LLC filed for bankruptcy late last month.
The bankruptcy plan calls for GMAC to supplant Chrysler Financial as Chrysler's captive lender for both wholesale and retail finance.
Said Tamara Darvish, vice president of DarCars Automotive Group in suburban Washington: "They say Chrysler Financial is still doing business as usual, but they're not."
Chrysler said GMAC had sent dealers paperwork for wholesale financing on Wednesday, May 6.
Chrysler Financial provided wholesale floorplanning to 62 percent of Chrysler dealers. Chrysler, Chrysler Financial and GMAC are working through Bankruptcy Court to get Chrysler Financial's approval to pave the way for dealers to make GMAC their future wholesale lender.