Toronto-Dominion Bank's purchase of Chrysler Financial will open a new avenue of financing for U.S. dealers and could help stoke the still-developing recovery in auto sales, reported Reuters.

TD Bank's $6.3 billion purchase of Chrysler Financial will make the Canadian bank one of North America's largest auto lenders. It also signals a renewed competition to provide loans for vehicle purchases and leases and the floorplan financing that allow dealers to keep inventory on site.

"I don't think it could be anything but good because it always helps us when there are more players in the game to go forward and do financing with us," said Chuck Eddy, who owns a Chrysler, Dodge and Jeep dealership in Youngstown, Ohio.

Credit terms for consumers and dealers have eased, but loan terms remain tighter than they were in 2007 when auto sales were 40 percent higher than now, dealers and consultants said.

"The finance companies were too aggressive in the boom of 2006 and 2007. But then they knee-jerked too far the other way and you had people with decent credit quality who couldn't qualify for a loan," said Van Conway, a Detroit-based adviser and consultant to the auto industry.

The tighter credit for the industry corresponded with the near disappearance of Chrysler Financial as a competitor in the market for new lending.

In 2006, Chrysler Financial, then a finance company owned by the No. 3 U.S. automaker, commanded 5.8 percent of the auto finance market, according to data from Experian Automotive.

By contrast, during the first three quarters of 2010 when it was operating as a unit of private equity firm Cerberus Capital Management, its market share was just 0.1 percent.

TD has an auto loan book of just over $3 billion in the United States and said it aims to book $1 billion a month by 2013. Meanwhile, executives said they expect industry-wide market for auto lending to grow to about $900 billion over the next three years, from $700 billion now.

TD's purchase of Chrysler Financial comes as many analysts and experts believe that the U.S. auto sales are in the early stages of a recovery that will run into 2012 and beyond because of the growth in the U.S. population, rising prices for used cars and the increasing age of vehicles on the roads.

U.S. auto sales are up about 11 percent in 2010 but sales in the first half were supported by purchases for fleets run by car rental companies and government agencies.

Easier loan terms are key if auto sales to consumers are to rebound toward pre-recession levels, dealers and analysts said.

Although U.S. auto sales have been recovering for almost two years, car shoppers with credit scores below the 620 cutoff for prime lending still face difficulties, analysts said.

"There are a lot of people with a 600 or a 610 on their credit report and the lenders previously in the last two years have shied away from that business," said Robert Weller, an attorney at Detroit-based Abbott, Nicholson PC.