Captives gain ground by offering the flexibility other lenders can't

Captive lenders are consolidating power in auto finance, capitalizing on their ability to align incentives with sales strategies. As traditional lenders struggle to maintain their foothold, captives are becoming essential dealership partners—especially in the new vehicle market—by offering flexible financing options that banks and credit unions can’t match.

What’s happening: Captives have navigated market turbulence by expanding their retail loan portfolios and using incentives strategically—allowing them to weather tighter credit conditions while sustaining dealer volume.

• Ford Credit’s share of the company’s total U.S. vehicle financing climbed to 55%, up from 50% last year.

• GM Financial reported that loan and lease originations totaled $14.3 billion, up 3.6% year over year.

• Lithia’s Driveway Finance Corp., originated $518 million in auto loans last quarter up 3.2% year-over-year.

Why it matters: Captives hold a structural advantage over banks and credit unions. They’re equipped to offer compelling financing—like 0% APR deals—tailored to drive retail sales. In contrast, traditional lenders are held to standardized underwriting policies that limit flexibility.

• This flexibility matters as dealerships face ballooning inventory levels. Take Lithia Motors, for instance: Its new and used vehicle supply swelled to 68 days, up from 55 days a year ago.

• More inventory means dealers need financing solutions that can help move cars faster—and that’s where captives thrive.

The bigger picture: Traditional lenders are being squeezed from multiple angles. Banks and credit unions are constrained by rising capital costs and regulatory pressures, limiting their competitiveness.

What’s next: As long as consumer demand is incentivized, captives will remain at the center of dealers’ financing strategies.

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