Car buyers shopping at Ford and General Motors dealerships may soon find it easier to secure financing, as both automakers have received regulatory approval to launch their own banks. The move could significantly expand lending options at a time when vehicle prices — and loan terms — are stretching to record levels.
In a press release issued on January 22, the Federal Deposit Insurance Corporation (FDIC) confirmed that its board of directors has approved applications from Ford Motor Company and General Motors to establish new financial institutions. The banks will operate under the names Ford Credit Bank and GM Financial Bank.
According to the FDIC, both banks will be chartered in Utah and will focus primarily on providing auto financing nationwide. Their core business will involve purchasing retail installment sales contracts from independent Ford and GM dealerships, effectively allowing the automakers to fund more vehicle loans directly through their own banking operations.
How the new banks will operate
The FDIC said funding for the new institutions will largely come from retail savings accounts and time deposits. Customers will be able to open and manage these accounts digitally through the banks’ websites and mobile applications, similar to modern online banks.
Ford and GM have been given up to 12 months to formally establish and launch their respective banks. If the banks are not operational within that time frame, the FDIC’s approval will expire.
While both automakers already operate large finance arms — Ford Credit and GM Financial — the creation of FDIC-insured banks marks a major shift. The move allows the companies to raise deposits directly from consumers rather than relying solely on wholesale funding and capital markets, potentially lowering borrowing costs and expanding loan availability.
What this means for car buyers
For consumers, the new banks could translate into more financing choices at the dealership. Buyers of both new and used vehicles purchased through Ford and GM dealers would be eligible for loans issued through the new banking entities.
This added flexibility comes at a critical time for the auto market. New vehicle prices in the United States have climbed sharply in recent years, pushing many buyers toward longer loan terms just to keep monthly payments manageable.
A recent LendingTree poll highlights the trend: nearly half of Americans with auto loans now have repayment terms longer than 72 months. The survey found that 47.5% of borrowers exceed the 72-month mark, including 7.6% who have loans stretching beyond 84 months.
As average new car prices have climbed close to $50,000, extended loan terms have become increasingly common — even as financial experts warn they can leave buyers vulnerable to negative equity.
Government efforts to ease car debt
Rising auto debt has not gone unnoticed in Washington. The White House has taken steps aimed at reducing the financial burden on car buyers through tax policy.
President Donald Trump’s signature legislation, known as the “One Big Beautiful Bill,” includes a provision allowing consumers to deduct up to $10,000 per year in car loan interest on federally built new vehicles. The deduction is intended to ease ownership costs and encourage domestic auto manufacturing.
While the tax break may help some buyers, it does not fully offset the growing issue of negative equity across the auto market.
A growing problem: underwater car loans
New data from Edmunds.com shows that a significant portion of recent car buyers owe more on their vehicles than they are worth. According to figures released on January 15, 29.3% of trade-ins used toward new vehicle purchases in the fourth quarter of 2025 had negative equity.
That means nearly one in three buyers was underwater on their existing loan at the time of purchase. Edmunds noted this is the highest share of underwater trade-ins since early 2021, when the figure reached 31.9%.
Negative equity often forces buyers into longer loan terms or higher monthly payments, compounding financial risk — particularly if vehicle values decline further.
A strategic move by automakers
By launching their own banks, Ford and GM appear to be positioning themselves to better control financing, stabilize lending during economic uncertainty, and keep buyers within their brand ecosystems.
For consumers, the impact will likely depend on how competitively the new banks price their loans and how they balance accessibility with responsible lending. Still, the move signals a major shift in how automakers support vehicle sales in an era of high prices, longer loans, and rising debt.
