Early Impacts of COVID-19: Incentives Boost Market Share for Captive Lenders

by Melinda Zabritski 2 min read July 20, 2020

Woman looking at cars in auto dealershipEveryone in the automotive industry has considered the same questions: What is the sales impact of COVID-19, and how will it influence the future of our industry? While the long-term impacts remain largely unknown, origination data from April and May provide some insight into the more immediate effects of the pandemic.

Both April and May saw vehicle registrations decrease year-over-year—however, it’s important to note, we saw slight improvement during the month of May. In April, new vehicle registrations dropped 50.8 percent, while used vehicles dropped 54 percent. We still saw declines in May, though the drops were significantly smaller–new vehicles were down 33.3 percent and used vehicles were down 32.4 percent.

Captives see jump in market share

One of the biggest changes since the start of COVID-19 is a shift in lender market share; specifically, captive lenders saw a dramatic increase in market share over the last three months. At the beginning of March, captive lenders comprised 52.7 percent of the auto finance market. That jumped to 55.7 percent in April, and as of May 1, reached 62.1 percent of the market.

Much of the increase in April and May was driven both by numerous incentives offered to encourage consumers to purchase vehicles and historically low interest rates.

Consumers choosing loans over leases

Another emerging trend from the last two months is more consumers choosing loans over leases. In April of 2019, 30 percent of all new vehicles were leased, while in April of 2020 that dropped to 24 percent. May showed a similar pattern: 30.1 percent of new vehicles were leased in May of 2019, but only 23.3 percent in May of 2020. The decrease in leasing could be attributed to dealer closures or consumer inability to transact.

While this may not have an immediate industry impact, it may down the road. For the past few years, leasing has hovered around 30 percent of new vehicle sales. This has helped to drive used vehicle sales since late-model off-lease vehicles have become increasingly popular with prime consumers. In fact, in Q1 2020, prime consumers made up more than 50 percent of used vehicle loans.

We may not know the long-term effects of the pandemic but staying close to the latest data will help lenders and dealers make informed decisions as they navigate the current landscape. Ultimately, this is a time in which lenders and dealers can build relationships with consumers by meeting their most pressing needs, which not only builds loyalty – it keeps the industry moving forward.

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Cash Flow Insights: Powering the Next Evolution in Lending

For decades, credit data has given lenders a trusted foundation for assessing risk. Now, consumer-permissioned cash flow data is adding another layer of insight into consumers’ financial lives, including income, spending, liquidity and changing financial obligations. The opportunity is significant. Nearly one in five consumers lacks access to or has damaged credit. New Experian research also shows that 60% of consumers who have previously been denied credit or received less favorable terms than expected believe the outcome would have been different if lenders had considered their recent income and banking activity alongside their credit history. 1,2 For lenders, cash flow insights can provide additional context about a consumer’s financial capacity and support more informed underwriting decisions. The next challenge is making those insights easier to use consistently and responsibly at scale. What are cash flow insights? Cash flow insights are derived from consumer-permissioned banking data and provide visibility into how money moves into and out of a consumer’s accounts. Depending on the information available, cash flow data can provide insight into financial behaviors such as: Income and income stability: Regular and irregular income streams and changes over time Spending and recurring expenses: Everyday spending patterns and ongoing financial obligations Account balances and liquidity: Available funds and changes in account balances Debt obligations: Loan payments and other recurring debt commitments Cash flow patterns: How money moves into and out of accounts over time Traditional credit information provides a rich history of how consumers have managed credit. Cash flow insights add context about their current financial activity and capacity, providing lenders with a more complete view of financial health. Cash flow insights can also add predictive value to risk assessment. Experian analysis shows Cashflow Score can deliver up to a 25% lift in predictive performance over conventional credit scores when tailored to targeted risk tiers.3 How lenders can put cash flow insights to work at scale As interest in cash flow insights grows, the conversation is moving beyond what the data can reveal to how financial institutions can use it consistently and responsibly. That requires standardized consumer reporting, clear governance and decision-ready insights that can work within established lending processes. The launch of Experian Cashflow Data Bureau at Vision 2026 reflects this shift from access to adoption. The new consumer reporting agency operates under the Fair Credit Reporting Act (FCRA) and is designed to help financial institutions adopt consumer-permissioned cash flow insights at scale. A key part of that foundation is the cash flow consumer report, which organizes consumer-permissioned banking information into a standardized consumer report regulated under the FCRA. This gives lenders a consistent foundation for incorporating cash flow information into lending decisions while providing consumers with access to the information in their report. Turning greater visibility into better decisions The next evolution in credit isn’t about choosing between traditional credit and cash flow data. Each provides a different perspective. Traditional credit information offers deep insight into how consumers have managed credit over time. Cash flow insights can add context about financial activity and capacity. Bringing those perspectives together can give lenders greater visibility into consumers’ financial health and help them better distinguish between risk and resilience, support more informed decisions and identify opportunities to responsibly expand access to credit. As cash flow adoption continues to grow, its value will come from how effectively it complements the information lenders already use. The opportunity isn't simply to see more data. It's to turn that additional visibility into smarter, more informed decisions. Explore how Experian Cashflow Data Bureau is helping financial institutions put consumer-permissioned cash flow insights into practice at scale. Learn more [1] Federal Reserve Bank of New York, The Market for Credit Building: Demand, Product Characteristics and Consumer Uses, 2026. [2] Experian commissioned Atomik Research to conduct an online survey of 2,000 U.S. adults age 18+. Fieldwork took place July 16–21, 2026. Margin of error: +/- 2.2 percentage points at a 95% confidence level. [3] Based on Experian analysis when Cashflow Score is compared with conventional credit scores, tailored to targeted risk tiers. Predictability based on KS.

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