TD buys Chrysler Financial

 TD Bank Pictures, Images and Photos
TD Bank closed a deal on Tuesday to buy Chrysler Financial from Cerberus Capital Management for $6.3 billion. Now, if you have at all followed this blog you likely know that I am no fan of Chrysler. They have been making terrible cars for too long (mostly terrible, anyway) and have a bumpy future ahead of them. Therefore, you would think that I would say that TD made a bad decision in purchasing Chrysler Financial.

Well, if this is your thinking then you’re wrong. TD has made a good deal with this purchase. Although it is called Chrysler Financial, they are not in the business of financing new Chryslers. This company already has ongoing car loans to Chrysler owners and do not take on new Chrysler car owners’ loans anymore. The values of these loans do not depreciate like Chrysler vehicles do. In fact, the values of these loans are solid, for the most part and have a great payback rate.

By TD buying Chrysler Financial, it allows them to grow their financing business, but it does not necessarily make TD players in the auto sector. It’s not like they will now be financing all new Chrysler vehicle purchases. Chrysler Financial is no longer in the business of financing Chrysler vehicle loans, other than existing accounts. This is the best part of this deal. TD picked up a company at a low price that has upside potential, allows them to grow their core business of financing good loans and does not have the risks of taking on new loans of Chrysler vehicles. This is a great move by TD Bank.