General Motors' financing arm GM Financial has agreed to pay about $4.2 billion for the European and Latin American auto lending operations of Ally Financial, as it looks to extend its in-house financing to boost sales, according to Reuters.

Ally, which is 74 percent owned by the U.S. government, announced the plan to sell its international operations in May, in an effort to speed up the repayment of bailout funds. The company is focusing on its U.S. business and has already sold operations in Canada and Mexico.

GM said the purchase should increase its sales in Europe and Latin America, reflecting its experience in North America after it returned to in-house financing with the creation of GM Financial in 2010.

GM is also still partially owned by the U.S. government after a series of bailouts during the financial crisis and the companies also have an intertwined history: Ally is the former financing arm of GM and was once known as GMAC.

The automaker has been gradually rebuilding its finance operations since selling a controlling stake in GMAC to private equity firm Cerberus Capital Management in 2006.

"We're bringing those parts of Ally back into the family," said Dan Ammann, GM's chief financial officer, on a conference call with reporters.

Ammann said that GM has realized about 200,000 additional auto sales in North America since it created GM Financial. In-house financing helps auto sales by allowing carmakers to subsidize auto loans, leases and dealership upgrades.

Ammann said he expects to increase sales by varying degrees in other markets around the world, but he declined to detail any expected gains.

Ammann said the deal had been approved by the GM board of directors but did not have to be approved by the U.S. government.

The transaction includes operations in Brazil, Mexico, Colombia, Chile, Germany, Britain, France, Italy, Belgium, the Netherlands, Sweden, Switzerland and Austria. It also includes Ally's 40 percent interest in its Chinese joint venture GMAC-SAIC Automotive Finance Company, GM said.

GM Financial will work to expand its international finance operations into markets where Ally has pulled back, including Russia, Australia and Argentina, Ammann said. This expansion will be done "organically" and not by acquisitions, he said.

Ammann said there is no need to expand its finance activities in North America.

The deal is expected to add $300 million to $400 million to GM Financial's annual earnings before taxes.

GM expects to contribute about $2 billion in cash to GM Financial to fund the purchase, the automaker said.