Chrysler Financial may sell for almost $6 billion to $7 billion and the parties may reach an agreement soon, according to Bloomberg, which first reported the news.
TD declined to comment. Chrysler Financial was not immediately available for comment. The source is anonymous because these talks are not public.
Chrysler Financial, the former lending arm of the automaker, saw its scope of operations reduced as part of a U.S. government-sponsored restructuring of Chrysler and General Motors. Ally, formerly GMAC, took over some of the unit's responsibilities.
Cerberus, co-founded by Stephen Feinberg and named after the mythological multiheaded dog that is said to guard the gates of the underworld, agreed to buy Chrysler in May 2007.
Chrysler was put through bankruptcy with financing from the U.S. government and is now majority-owned by a trust fund aligned with the United Auto Workers union. Cerberus retained ownership of Chrysler Financial.
In September, another source told Reuters that Chrysler Financial was planning to boost its business through lending to mid-market companies and 'near-prime' customers.
TD has been expanding operations in the United States. Earlier this year, it closed on a $192 million purchase of South Financial in a deal that gave Canada's No. 2 bank a larger branch presence in the United States than it has in Canada.
TD also owns 46 percent of U.S. online brokerage TD Ameritrade