Banks and credit unions together capture the majority share of used-vehicle loans, while captive finance companies’ already-small share has shrunk further.
That trend may continue if demand for used vehicles increases due to the current climate of high-interest rates, high new-vehicle prices and relatively low new-vehicle incentives. Those factors are expected to affect auto-finance results through the first quarter of 2025, according to Experian Automotive analysts.
Historically, “captive share is at a peak when new-vehicle incentives are at a peak,” Melinda Zabritski, head of automobile finance insights for Experian, tells WardsAuto. OEM incentives are typically available only to captives.
Meanwhile, the outlook for new-car incentives is mixed. On average, incentives are higher than in years past, when new vehicles were in critically short supply, bottoming out in 2022. Nevertheless, incentives are still lower than they were before the pandemic.
New-Vehicle Loan Share
While it lasts, a relatively low level of incentives could be an opportunity for banks and credit unions to capture some share, especially in used, but also in new markets. For dealership F&I managers, that could make banks and credit unions more attractive as a destination for customer credit applications.
In the first quarter, captives accounted for the leading share of new-vehicle loans, at 46.8%. But that was down from 53.7% a year ago, according to Experian. Bank share of new-vehicle loans was 30.3% in the first quarter, up from 25.9% a year ago. Credit union share was 15.3% in the first quarter, up from 13.4%, Experian says.
“The banks I’ve talked with in the last couple of months are looking at getting more aggressive,” in auto finance, Zabritski says.. “That has come across in probably the last 10 bank meetings I’ve had. I think the market share numbers do reflect that.”
According to Experian Automotive, banks accounted for about 28.4% of used-vehicle loans in the first quarter of 2025. That was up from 27.9% in the first quarter of 2024. Credit unions accounted for about 28.2% of used-vehicle loans in the first quarter, up from 27.7% a year earlier, Experian says.
Independent finance companies specializing in used-vehicle loans also gained share, at 20.5% of used-vehicle loan volume in the first quarter, up from 19.7% a year ago. Buy-here, pay-here dealers followed at 15.5% share in the first quarter, down from 16.3% a year ago, Experian says.
Captives had the lowest share in used-vehicle financing, at only 7.4% in the first quarter, down from 8.5% a year ago. That’s probably related to the ongoing shortage of lease returns coming back to the captive finance companies. Fewer vehicles are coming back to the captives because the captives were originating fewer leases three years ago.
Off-lease vehicles, often reconditioned and sold as certified pre-owned, account for a large share of captive finance companies’ used-vehicle share, Zabritski says.
