Ford and GM win approval to launch new car loan banks

• Ford and General Motors have received federal approval to establish new banks in Utah.
• The new banks will primarily offer auto financing for their respective car brands.
• Nearly half of all new car buyers are choosing loan terms longer than 72 months.

Car loans for customers shopping at Ford and General Motors dealerships may be easier to get from new banks that the automakers have won clearance to create.

The Federal Deposit Insurance Corporation said in a Jan. 22 press release that its board of directors has approved Ford and GM’s requests to establish new financial institutions that will be known as Ford Credit Bank and GM Financial Bank.

The FDIC said each institution will be chartered in Utah with proposed business models that will “focus on providing automotive financing products nationwide, primarily through the purchase of retail installment sales contracts from independent Ford dealers.”

The agency said funding for the new banks will “primarily consist of retail savings accounts and time deposits obtained via the bank’s website and mobile application.”

The companies have been given 12 months by the FDIC to create the new banks. Otherwise, the approval expires.

What does it mean for car buyers?

Car buyers who shop at Ford and GM will have another lending option at a time when new cars are more expensive than ever.

The loans from the new bank would be available for new and used vehicles purchased directly from Ford and GM dealers.

The establishment of the new company lending institutions comes at a time when nearly 50% of all new car buyers are opting for loans that last longer than 72 months, according to a new poll from Lending Tree.

In case you missed it: Why 84-month car loans are surging and what it means for buyers

According to the poll, 47.5% of Americans with auto loans have terms longer than 72 months, including 7.6% who have terms longer than 84 months.

Longer loans are becoming more prevalent as new car prices continue to rise. Last year, the average price of a new vehicle in the United States soared to record levels, near $50,000.

The White House has tried to address Americans’ increasing car debt. President Donald Trump’s signature legislation, known as the “One Big Beautiful Bill,” makes up to $10,000 in car loan interest on domestically-built new models deductible annually on federal tax returns.

Many drivers are underwater on their car loans

Almost 30% of recent new car buyers were underwater on loans for their trade-ins, according to new data released Jan. 15 by Edmunds.com.

The group said 29.3% of trade-ins that were used in new car purchases were underwater in the fourth quarter of 2025, which means the owners owed more on their existing vehicle than it was worth at the time of trade-in. Edmunds said that figure represented the highest share of underwater car buyers it has recorded since the first quarter of 2021, when the group said 31.9% of trade-ins had negative equity on their trade-ins.