The Treasury Department is set to give GMAC LLC at least $7 billion in aid allowing it to expand lending to customers.
The Treasury announced the investment on Thursday, saying it would help provide a reliable source of financing to auto dealers and customers looking to buy vehicles.
GMAC is the main source of financing for General Motors customers and was recently tapped by the administration as the main lender for Chrysler.
The move comes after GMAC failed a bank stress test earlier this month, with the Treasury mandating the company raise $11.5 billion within six months.
In December GMAC Financial Services received $5 billion from the government's $700 billion financial bailout program. In exchange for the funding, the government received 5 million GMAC shares.
The additional funding gives the Treasury more control over GMAC, and it has already told the General Motors Corp. financing arm that it must extend its financing services to bankrupt Chrysler LLC.
GMAC reported a first-quarter loss of $675 million and said earlier this month it has seen rising defaults in its auto finance division.