Captive lenders are steadily losing market share in both new- and used-vehicle lending as banks, credit unions, and independent finance companies grow more competitive, according to Experian Automotive’s latest analysis of first-quarter 2025 data.
The shift comes amid persistently high interest rates, elevated new-vehicle prices, and subdued OEM incentives—factors that are pushing more consumers toward used vehicles and alternative lenders. For dealership F&I managers, the trend presents an opportunity to expand relationships with non-captive lenders as captives become less dominant in the finance office.
In the new-vehicle market, captive lenders still held the largest share at 46.8% in Q1 2025. However, that figure represents a notable decline from 53.7% a year earlier. In contrast, banks increased their share from 25.9% to 30.3%, while credit unions rose from 13.4% to 15.3%. The growth reflects more aggressive competition by banks in particular, with several reportedly ramping up auto lending activity.
Used-vehicle lending continues to be led by banks and credit unions, which together accounted for more than half of all used-vehicle loans in the first quarter. Banks captured 28.4% of the used-loan market, up from 27.9% a year ago, while credit unions grew their share to 28.2% from 27.7%. Independent finance companies specializing in used vehicles also increased their presence, reaching 20.5% market share, up from 19.7%. In contrast, buy-here, pay-here dealers slipped to 15.5% from 16.3%.
Captive lenders recorded the lowest share of used-vehicle loans, falling to 7.4% from 8.5% year over year. This drop is tied in part to a lingering shortage of off-lease inventory, a primary source of certified pre-owned vehicles typically financed through captives. The shortfall stems from reduced lease originations three years ago, which now limits captive lenders’ access to used inventory.
The current lending environment continues to reflect the broader post-pandemic shift in automotive finance. While new-vehicle incentives have recovered from the lows of 2022, they remain below pre-pandemic levels. Captive lenders, which typically rely on incentive-backed offers to maintain share, may face continued headwinds if these conditions persist into the remainder of the year.
