Captive Finance Company

A subsidiary whose purpose is to provide financing to customers buying the parent company's product.

Investopedia Says:
The captive finance company is usually wholly owned by the parent company. Although there are numerous examples of these, the best ones occur in the automotive industry. Each of the "big three" automakers has a captive finance company. General Motors has General Motors Acceptance Corporation (GMAC), Daimler Chrysler has Chrysler Financial, and the Ford Motor Company has Ford Motor Credit Company (FMCC).

Company, usually a wholly owned subsidiary, that exists primarily to finance consumer purchases from the parent company. Prominent examples are General Motors Acceptance Corporation and Ford Motor Credit Company. Although these subsidiaries stand on their own financially, parent companies frequently make Subordinated Loans to add to their equity positions. This supports the high leverage on which the subsidiaries operate and assures their active participation in the Commercial Paper and bond markets.