Chrysler’s sale to Cerberus Capital Management LP will be completed after banks agreed to keep $10 billion of loans that investors refused to buy.

The DaimlerChrysler AG unit scrapped the sale of loans after banks led by JPMorgan Chase & Co. failed to find demand, said investors who were briefed on the decision. In addition to the banks, Cerberus and DaimlerChrysler agreed to assume $2 billion of loans.

Cerberus, which didn’t have trouble finding lenders for its $7.4 billion purchase of a stake in General Motors Corp.’s finance unit last year, couldn’t find buyers for the Chrysler loans even after twice raising interest rates. Auburn Hills, Mich.-based Chrysler joins almost 40 companies that reworked or abandoned deals in the past three weeks.

“People have basically put the ‘Closed for Business’ sign out,” an analyst at bond-research firm Gimme Credit Publications Inc. in Montclair, N.J., Shelly Lombard, said. “You never know what’s going to make it switch, but investors turn that switch off so fast.”

Chrysler will proceed with plans to sell $8 billion of loans for its financing division after raising interest rates. Cerberus agreed to buy 80.1% of Chrysler from DaimlerChrysler in May. As part of the agreement, Cerberus will invest about $5 billion in the automotive unit and about $1.1 billion in the financial services unit. Stuttgart, Germany-based DaimlerChrysler will hold the remaining 19.9% and receive $1.3 billion from Cerberus as part of the transaction.

The chief executive officer of DaimlerChrysler, Dieter Zetsche, reiterated yesterday that the sale of Chrysler will take place this quarter. The transaction is scheduled to close in early August, investors said, citing documents provided by the banks.