Now May Be the Time to Finance With a Captive Lender

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - April 8, 2020

Due to coronavirus situation, or COVID-19, much has changed in the way the world does business. In the U.S., one industry that has been impacted is auto manufacturing. Many states are under mandatory shelter-in-place orders, which means that non-essential businesses have been ordered to close by state mandate – showrooms at dealerships included, in most of these states. So, what makes now a good time to finance a car with a captive lender? Let’s take a look.

What Is a Captive Lender?

Captive lenders are the lending divisions of automakers, like GM Financial for General Motors’ brands and Kia Motors Finance for Kia. These third-party lenders only work with people that are financing a car at a franchised dealer. Though many deals through captive lenders tend to focus on people with good credit, there are several that can – and do – work with people that have less than perfect credit.

If you’re shopping for a vehicle right now, regardless of your credit situation, it’s worth it to look at captive lenders. Many of them are offering special incentives to keep sales up – as well as focusing on the safety and health of all their customers. This means more and more automakers and dealerships are rapidly moving the majority of their business online, offering ways for customers to sign documents virtually, and even instituting touchless delivery.

Borrowers with bad credit are often under the impression that getting a new car from a captive lender just isn’t possible, and that’s not the case. Though not every captive lender works with people in all credit situations, there are still possibilities out there if you meet a lender’s criteria.

For bad credit borrowers, this means bringing in additional proof that you have the ability to complete an auto loan compared to someone with good credit. But the extra steps are worth it if doing this helps the lender consider you for a loan.

Current Captive Lender Car Deals

Most automakers are offering deals on new cars as a result of the coronavirus. Here’s a look at some available deals right now:

  • Honda is offering 90-day payment deferrals in most states, plus putting more dealer cash on the hood. They’re also offering special financing rates for consumers on some certified pre-owned models including the Pilot, Accord, and CR-V.
  • Hyundai is offering 0% financing for 84 months on 2019 models for those who qualify, and 120-day payment deferrals to all new customers and those who are struggling to pay their loans.
  • Kia is also offering 120-day payment deferrals for current customers and new buyers.

No Luck With a Captive Lender?

If you’re unable to work with a captive lender due to your credit, you may need to work with a subprime lender instead. Subprime lenders, like captive lenders, are third-party lenders that work exclusively through dealerships. Subprime lenders, however, don’t work just through franchised dealers. Instead, they work through franchised and independent dealership special finance departments.

These lenders specifically work with people that have less than perfect credit. While they may not be able to provide many of the deals that automakers are currently offering though their captive lenders, this doesn’t mean you’re out of luck.

With car sales slowing, many dealers may be forced to price vehicles lower if they want to keep sales going. This is good news for buyers, especially bad credit buyers that are struggling to find an affordable car that meets their needs.

Let Us Help Through These Trying Times

Car buying has taken a drastic turn in the last few weeks. These changes, spurred on by the reality of community spread of COVID-19, have forced a change for many in the automotive industry whose practices have remained largely unchanged over the years.

Only time will tell if these changes represent a permanent new way of doing business. However, one thing is apparent: automakers are doing what they can to keep sales up. This means now could be the right time to finance with a captive lender.

If you’re looking for a dealership to finance your next vehicle through, CarsDirect wants to help. We’re teamed up with a large network of special finance dealers that have the lenders available to work with people who are struggling with credit issues.

Don’t stress over the frustration of finding a dealership that’s still open. Instead, let us connect you to a local dealer that knows how to help. Simply fill out our easy and quick car loan request form to get started right now.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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