WASHINGTON (AP) - The U.S. government is moving ahead on a fresh multibillion dollar cash infusion to stabilize auto financing company GMAC Financial Services, according to a person with knowledge of the matter.

GMAC Financial Services is expected to receive $3.5 billion more in federal aid to further stabilize the automotive lender. Photo AP

GMAC, based in Detroit, is instrumental to the operations of automakers General Motors Co. and Chrysler Group LLC. It has already received $12.5 billion in taxpayer money and is 35 per cent owned by the federal government.

The person, who spoke on condition of anonymity because discussions weren't complete, says the new infusion would be in the range of another $3 billion. That would fall short of the roughly $6 billion the government had earlier thought GMAC would need to stabilize the company.

After the government conducted "stress tests" on financial institutions earlier this year, it demanded that that GMAC raise an $11.5 billion capital cushion to help it weather further economic decline. GMAC was unable to raise the funds privately.

The anticipated additional government aid for GMAC would come from the $700 billion taxpayer-financed bailout pot the government set up at the height of the financial crisis last year. The money was intended to shore up banks so that they would boost lending to people and businesses and support the sagging economy. However, money also has been used to help GM, Chrysler, insurance companies and others survive the worst financial crisis and recession since the 1930s.

GMAC has been in negotiations with Treasury officials for months over additional taxpayer aid.

Treasury spokesman Andrew Williams declined to offer details, but said: "Treasury is in discussions with GMAC to ensure its capital needs as determined ... by the stress tests are met."

Despite the government aid, GMAC still remains on shaky financial ground. Last month, it reported a quarterly loss of $767 million. The company has struggled under the weight of its ailing mortgage lender, ResCap. The unit was a major dealer in sub-prime mortgages and is still suffering from soured loans it made during the housing boom. Some analysts have speculated that GMAC might have to shut down ResCap altogether.