What is a Captive Finance Company?
A captive finance company is a subsidiary company established for the purpose of providing credit to customers of the parent company. This is designed to facilitate financing for consumers making big purchases like appliances and vehicles. Captive finance companies are either owned or controlled by the parent company, depending on how they are structured, and they exist solely for the benefit of the parent company. One of the most common examples of a captive finance company is a credit card company that provides store charge cards. Department stores often offer store cards to their customers and people can also obtain store cards for grocery stores and other types of stores. Customers can often apply on the spot when making a big purchase and may be offered an incentive such as a discount off the sales price or a savings card that will apply to future purchases.
