An in-house finance captive is a subsidiary or entity established by a dealer or manufacturer to provide financing options to customers purchasing their products or services. It allows the dealer to offer loans, leases, or other financing solutions directly to customers.
Establishing a captive finance company can provide several benefits, including greater control over financing terms, increased customer loyalty, additional revenue streams, and various tax benefits. An in-house finance captive is vertically integrated with your core business creating a more streamlined sales process.
DOFC offers an in-house finance captive “in-a-box”. We facilitate formation, legal and regulatory compliance, necessary infrastructure, defining underwriting criteria, designing financing products, and implementing technology for loan servicing and customer management.
DOFC handles compliance with financial regulations, consumer protection laws, lending licenses, and other industry-specific regulations. Our legal experts specialize in all finance and consumer protections needed to operate your in-house captive.
The required capital can vary significantly based on factors such as average loan amount, projected sales volume, and number of states in which the captive will operate. DOFC has designed a model which is very cost effective to run. We have solutions for any size captive a dealer is looking to start.
The top three ways dealers fund their in-house captive are self-funding, bank loan or credit facility and/or leveraging their Reinsurance or Dealer Owned Warranty Company(s). DOFC has in-depth knowledge and experience in facilitating capital for dealers.
We’ll spend time with your CEO and CFO to understand the overall ROI the dealership would like to earn. We’ll also get a good understanding of your overall risk appetite and long-term financial objectives. With all your input, our internal risk team will create a data driven underwriting policy program that is designed to earn you the highest return possible with the lowest possible losses.
Captive finance companies are profitable businesses and profitability will be based on the risk profile you dictate to our team. Additionally, the customer and vehicle retention will play pivotal roles in the profitability of your dealership(s). Paired with the tax benefits associated with an in-house captive your ability to generate vast profits can stem throughout your family of organizations.
