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There aren’t a lot of disadvantages to using captive auto financing, especially for borrowers who are able to be approved for a below-market interest rate. However, here are a few items to be aware of:
Shorter terms and higher payments

The lowest interest rates offered by captives are usually available for shorter loan terms only, such as 36 months. If you want a 60-month loan to keep your monthly payment low, that may be possible only with a higher rate.
Comparing with noncaptive lenders

If you go straight to a dealership and take captive financing without comparing the best auto loan rates available, you could miss out on a better offer. Dealerships may have a greater incentive to steer you toward their brand’s captive lender instead of other lenders.

In many cases, the captive lender’s rate will be the lowest rate you can find. However, if the rate you’re offered is close to market rates, you might benefit from getting auto loan preapproval with a different lender, such as a bank or credit union. If you do find a lower rate, present it to the dealership to see if the captive lender can beat it.