The financial unit of automaker Chrysler LLC was granted an additional $1.5 billion to help it make new car loans.

The U.S. Treasury Department will make the loan from the using money from the $700 billion bailout fund created by the Troubled Asset Relief Program.

For the first year, the loan will carry an interest rate one percent above the London interbank offered rate (LIBOR). After the first year, the rate will rise 1.5 percentage points above LIBOR , Reuters reported.

The government is granting loans to the financial units of companies to help them offer more car loans to consumers who affected by a credit crunch in the midst of a global financial crisis.