Chrysler Repays Uncle Sam: Will Welfare Work?

Chrysler filed bankruptcy two years ago. The auto giant was on the verge of collapsing. But now Chrysler will soon pay back its bailout money of $7.5 billion to the US and Canadian governments.

The maker of minivans and Jeeps is in the process of negotiating a refinancing deal with Morgan Stanley (NYSE:MS), Goldman Sachs Group Inc (NYSE:GS), Citigroup Inc (NYSE:C) and Bank of America Corporation (NYSE:BAC). That’s smart considering Chrysler paid $1.2 billion in interest expenses last year with an average interest rate of 12 percent.┬áChrysler also plans to raise funds by getting credit from banks (NYSE:XLF) and an upcoming bond sale.

Chrysler and rival General Motors Company (NYSE:GM) have faced a lot of legitimate criticism for needing government handouts to keep their dismal businesses alive. Only time will tell whether Ford (NYSE:F), Toyota Motors (NYSE:TM), and Honda Motors (NYSE:HMC) will pay a hefty price for competing with welfare recipients.

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