What is a Captive Finance Company?

The definition of a captive finance company is a subsidiary that finances retail purchases made by customers of the supplier/manufacturer that owns it. The supplier/manufacturer is the parent of its captive house. These companies can be midsize to large firms that pull in significant profit for the parent company. Captive finance companies play a large role in the world of car-buying and can be beneficial for drivers with not-so-perfect credit. Read on to learn more about captive finance and its relation to car buying. 

Captive Finance Companies in the Auto World 

Some of the best examples of captive finance companies are found within the auto industry. Most car buyers are unable to pay for a vehicle in cash and need to apply for financing so they can drive home in the car they want. Here are just a few examples of captive companies that offer auto financing services: 

• Toyota Financial Services 
• General Motors Acceptance Corporation 
• Ford Motor Credit Company 
• American Honda Finance 

What Are the Benefits of a Captive Finance Company? 

Why consider financing through a captive finance institution? Here are a few advantages to note: 

• Less Guesswork: One of the biggest issues car shoppers face is the guesswork involved in financing a new or pre-owned car. However, when you finance with a captive finance company, payment plans and rates are typically preset. There’s also a good chance that they’ll choose your car for you. 
• Opportunity for Lower Rates: You may be able to snag a lower rate with a captive finance institution than you would from another type of loan company. 
• Better Bad-Credit Options: Drivers whose credit scores need work can often get auto loans through captive finance companies. 

How to Get an Auto Loan Through a Captive Finance Company 

If your credit needs improvement but you’re searching for a car near Toms River, learn more about the captive finance application process below: 

• The Details: Because they’re in-house finance institutions, captive companies can work with clients others can’t. They’ll want to know about your circumstances and finances, so they can determine how much will be financed for you. 
• Down Payment: Captive finance companies often require a substantial out-of-pocket investment. Be prepared to put money down on the vehicle. In some cases, they also require that you agree to automatic monthly payments. 
• Lending Guidelines: The guidelines other financial institutions follow, such as FICO score and debt-to-income ratio guidelines, don’t always apply to captive finance institutions. They can look beyond those because if you’re unable to make your payments, there’s a very good chance they’ll repossess the vehicle. 
• Loans on Their Terms: Captive in-house companies work hard to bring in a profit for their parent firms. They can provide funds other loan companies can’t, but it’s important to understand that you likely won’t have a lot of say-so in the vehicle that’s chosen for you, as well as interest rates and payment schedule for your loan. 

Learn More About Captive Finance Plans from Automotive Avenues

Do you have more questions about auto financing options for the vehicle you want? Contact us at Automotive Avenues in Wall, or visit us in person near Howell Township and Trenton to speak with our knowledgeable finance team. While you’re here, be sure to browse our current new vehicle specials for exciting offers on a brand-new .