Chrysler dealers caught in finance feud

DETROIT, Oct. 18 (UPI) -- U.S. Chrysler dealers holding loans from Chrysler Financial who need new credit lines may be caught in a dispute with General Motors, observers say.

An undetermined number of Chrysler dealers are facing a mid-November deadline to secure permanent financing to buy vehicle stock and stay in business, but are caught up in a dispute between Chrysler Financial, the automaker's former captive financing company, and new lender GMAC Financial Services, The Detroit News reported Sunday.

At issue, the newspaper says, is who is first in line on assets if a dealer goes out of business and both finance companies hold debt. The News said that while about half the Chrysler dealers seeking GMAC financing have been approved, others have not, and the loss of more Chrysler dealers would be another blow to the automaker as it scrambles to restructure.

"Everybody's nervous," Jim Arrigo, a Florida dealer and co-chairman of the Chrysler Dealer Council, told the newspaper. "There is a large group of dealers waiting to see if they can get refinanced."

Chrysler spokeswoman Kathy Graham said the automaker is working with both finance companies and "all parties want it to work."