Why your next car loan might be more expensive | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

You’re not just signing up for a car when you finance at the dealership — you’re stepping into a lender’s strategy.

Right now, that strategy increasingly belongs to big banks. Experian’s Q3 2025 data show banks at 28.9% of total auto financing, up 3.1 percentage points from a year earlier — the sharpest gain of any lender type.

That shift sounds technical, but it changes who gets approved, what rates you see, and how much room you really have to negotiate.

Banks grab the vehicle financing growth

Experian’s Q3 State of the Automotive Finance Market puts banks at 28.9% of total vehicle financing (new and used, loans and leases), up from 25.8% a year earlier. Captive finance companies dropped to 26.2% (down 262 basis points), while finance companies gained modestly and credit union share was “nearly flat” overall.

Banks finance a growing share of auto loans.

Shutterstock

This builds on a trend that started earlier in the year. In Q1 2025, Experian reported that banks’ total auto finance share climbed to roughly 26.6%, reversing Covid pandemic-era share losses, with captives and credit unions both ceding ground.

By Q2, banks had “recaptured the top spot” in total vehicle financing at about 27.5% versus captives at roughly 26.6%.

More Personal Finance:

Auto Finance News reported that credit unions gained some new-vehicle share in mid-2025. Credit and Collection News indicated, however, that credit unions couldn’t keep up in used cars.

Auto Finance News’ analysis of Experian insights notes that credit unions’ share of new-vehicle financing rose as captives’ share slipped, yet banks gained across both new and used segments.

For you, that means the odds your loan is coming from Chase, Wells Fargo, or Bank of America are higher now than they were even a few quarters ago.

OEM partnerships tilt the table toward banks

One of the biggest reasons for banks’ surge isn’t inside your local branch; it’s inside OEM finance rooms.

Experian’s Q3 report directly links part of the bank share jump to new manufacturer relationships. The standout example is Volkswagen.

A Wells Fargo release and dealer trade coverage confirm that Volkswagen Financial Services U.S. and Wells Fargo launched an agreement naming Wells Fargo the preferred purchase financing provider for Volkswagen and Audi dealers in the U.S. starting May 2025, with Ducati added in 2026.

That deal shows up in the numbers. According to Experian’s Q3 data, Wells Fargo Auto originations hit $8.8 billion in the quarter, up 114.6% year over year, helping push banks’ loan share to 31.3% of all auto loans, a gain of 272 basis points from Q3 2024.

Chase has been expanding its manufacturer footprint as well. Experian’s Q2 2025 analysis and Auto Finance News coverage highlight Chase Auto’s private-label financing arrangements with Subaru, Jaguar Land Rover, Maserati, Aston Martin, and McLaren.

Tesla buyers also see Chase among the preferred lender options, alongside other partners such as FI Connect and traditional banks, according to Tesla financing guidance and industry reporting.

Banks aren’t just showing up in dealer F&I offices by chance. OEMs are deliberately routing more customers into bank-backed programs, shifting some financing risk off the captives and onto large balance-sheet lenders.

Captives are under pressure, not dead

Captive finance companies still matter — a lot.

Experian’s Q3 breakdown, according to Auto Finance News, shows captives controlling 52.9% of new-vehicle financing, down from 58.9% in the same quarter a year earlier but still more than half the market.

Earlier in 2025, Experian’s Q1 and Q2 press materials described a “market share rebound” for banks in total financing, while emphasizing that captives remained the dominant force for new vehicles.

What’s changing is the balance between subsidized, incentive-heavy captive offers and more traditional bank financing. Experian reported that higher vehicle prices, moderating incentives, and shifting OEM strategies were encouraging buyers to stretch terms or refinance rather than rely solely on captive promotions. With fewer 0% offers and more selective subvented programs, banks are increasingly filling the gaps.

So when you see a manufacturer’s promo on a specific model, odds are high that the financing still runs through the captive. But step even slightly off the incentive grid — different model, used vehicle, or non-promo timing — and it’s more likely a bank is behind the approval.

Credit unions: strong rates, tougher access

Credit unions remain a bright spot for rate shoppers, even if their market share headlines don’t look as dramatic.

Auto Finance News’ coverage show credit unions boosting their share of new-vehicle financing to 11.7%, up from 10.2% a year earlier, while their used-vehicle share eased to 28% as banks climbed to 29.7%. That mix nets out to “nearly flat” total share — but masks real gains in new loans.

On pricing, credit unions often still lead. Auto Finance News notes that Sharonview Federal Credit Union, based in South Carolina, was advertising auto loan APRs “as low as 3.74%” as of Dec. 1, with year-to-date auto originations more than doubling, from about $47 million in 2024 to roughly $116 million in 2025.

In another Experian release on Q2 2025, credit unions were singled out as aggressively competing in the used segment, as refinances surged nearly 70% year over year.

Kelton Graham, vice president of lending and sales at Sharonview, told Auto Finance News that “our direct members have a substantial market advantage.” This means that borrowers who go to the credit union first — instead of letting a dealer choose the lender — can often lock in better pricing and more flexible terms.

The trade-off, of course, is that you need to qualify for membership and do more of the legwork yourself.

Banks are stretching down the credit spectrum for car buyers

The most important shift may be which customers banks are now willing to finance.

“Banks tend to be more prime, but at the same time, we are having that finance company growth, which is a bit more subprime — the two areas of the spectrum that are growing are the top and the bottom end,” Experian’s senior director of automotive financial insights, Melinda Zabritski, told Auto Finance News.

In that same report, Zabritski noted that banks saw about a 21% year-over-year increase in auto finance volume tied to borrowers with credit scores between 600 and 620 for vehicles eight model years old or newer. She added that banks were the only lender segment to grow volume in the 620-and-below group, underscoring a deliberate move into riskier credit tiers.

Equifax’s December 2025 auto lending outlook echoed that trend, highlighting that banks and nonbank finance companies have eased underwriting in certain buckets to maintain volume in the face of high prices and slower unit sales.

KBRA, in a separate October 2025 note on bank auto lending, pointed out that the rebound in bank originations is running alongside “elevated loss expectations” on some subprime and near-prime portfolios as prices and rates remain historically high.

For you, that means if your score is in the low 600s, you may be getting more “yes” answers from banks than you did a year or two ago, but those yeses may come with steep rates and longer terms.

Affordability is driving vehicle financing

None of this is happening in a vacuum; it’s happening because cars are expensive and budgets are tight.

“Cars have become way more expensive, and there are certain parts of our economy where salaries have not kept pace,” Sanjiv Yajnik, president of financial services at Capital One, told Auto Finance News when asked about 2025 conditions.

Experian’s Q1 and Q2 2025 reports show average new-vehicle loan amounts in the low-$40,000s, with average monthly payments in the mid-$700s, even as interest rates eased slightly from 2023 peaks.

An August 2025 Experian Insights post on refinancing noted that automotive refis grew nearly 70% year over year, driven by consumers trying to lower payments on loans originated in higher-rate periods.

Cox Automotive’s June 2025 Dealertrack Credit Availability Index also flagged slight improvements in auto credit access as some lenders extended terms or relaxed cutoffs to keep loans moving in a slower sales environment.

When you put that together, high prices, stretched terms, more refinancing, and banks expanding both at the top and bottom of the credit spectrum, the bank market share story stops being just a number and becomes a snapshot of how hard people are working just to keep cars affordable.

What this means for your next auto loan

If your credit is strong, this bank surge can actually work in your favor, if you use it strategically.

Experian, Bankrate, and multiple lender reviews all emphasize the same basic playbook: get preapproved by at least one bank, one credit union, and, if possible, compare any captive promotion before you walk into a dealership.

With banks competing hard for prime borrowers, you may be able to use a low bank quote to push the dealer’s captive offer lower or secure better terms on a non-incentive vehicle.

If your credit is in the 600-620 band, you’re exactly the type of borrower banks are leaning into. Experian’s Q3 data shows your group seeing the fastest growth in bank-financed loans — good for approval odds, but risky for your budget. This is where it pays to check credit union options and consider whether a smaller, older vehicle or a shorter term is worth it to avoid double-digit APRs.

And if you’re further down the credit ladder, the growth in bank and finance company lending doesn’t change the basic math: High rates plus long terms can wreck your finances quickly.

Equifax’s 2025 auto lending trends piece warns that delinquencies and repossessions remain elevated in lower-score bands, even as access improves. In that environment, sometimes the best move is not grabbing the first approval, but stepping back to clean up your credit before locking in a multi-year commitment.

Banks gaining nearly 29% of the market doesn’t automatically mean a bad deal for you. But it does mean you can’t just accept whatever lender the dealer drops into the contract.

The more you know who’s behind that loan, and how aggressively they’re chasing market share, the better chance you have to make their competition work for your wallet, instead of the other way around.