Chrysler to Form Finance Arm with Santander

A U.S. unit of Spain's Banco Santander SA will form Chrysler Capital to provide loans to Chrysler Group LLC dealers and customers in America.

Chrysler says it has reached a 10-year agreement with Dallas, Tex.-based Santander Consumer USA, which will launch the new finance arm on May 1. Santander will give the carmaker a nonrefundable upfront payment and share of Chrysler Capital's revenue. Neither amount was disclosed.

Chrysler has been searching for a preferred lending partner since it notified Ally Financial Inc. nine months ago that it would end their agreement on April 30. The automaker teamed up with Santander in 2010 to offer subprime loans to buyers with weak credit scores.

The finance arm says it will make loans to Chrysler dealers for new and used vehicle inventories, dealership construction, real estate, working capital and revolving lines of credit. Those services also will be available to U.S. dealers of Fiat SpA, which owns 58.5% of Chrysler.