ROCKLEIGH, N.J. — Volvo Cars of North America revealed Sunday that it has formed a captive finance arm that will roll out later this year throughout all 50 states.

Volvo Car Financial Services — which is a wholly owned subsidiary of Volvo Car Corp. — will provide Volvo dealers with retail financing and leasing programs, while also offering them commercial financing (including floor planning, working capital loans and real estate loans), as well.

"Launching a true captive finance arm is the most important step we will make this year to support our dealer network and customers," stated John Maloney, president and chief executive officer of Volvo Cars of North America.

"This is a key initiative in our long-term growth plan. We expect to have the commercial loan products available within six months and the consumer loan and lease products available before the end of the year," he added.

Explaining the retail financing side, VCFS and Bank of America have a framework agreement where Bank of America would provide the funding for the financing, and the two companies are expected to finalize the agreement within a few weeks.

Also, there are plans for BofA Merrill Lynch to be an exclusive provider for VCFS auto loan and lease securitizations in the U.S. Additionally, VCFS plans to support the credit process by licensing the proprietary underwriting and risk-based pricing technology from BofA.

Officials noted that there will be a separate credit policy at credit staff for VCFS.

"Volvo now will offer a highly competitively priced captive loan and lease product for Volvo customers, and we're glad to back that up with our experience and expertise," said John Hyatt, president of Bank of America Dealer Financial Services.

"Our solutions aren't one-size-fits-all at Bank of America. We are thrilled to help Volvo reach this milestone through our customized and flexible funding model," Hyatt continued.

VCFS will originate and fund the dealers directly for retail financing and leasing, but CenterOne Financial Services will take of managing the servicing of contracts.

"Rather than re-create our own loan and lease servicing organization, we decided to leverage CenterOne's world-class servicing platform while maintaining a Volvo-branded customer experience," said Tony Nicolosi, president of Volvo Car Financial Services.

"We look forward to this opportunity to lend our experience in captive finance and provide premier third-party servicing to Volvo Car Financial Services," said Brent Sergot, vice president and general manager at CenterOne.

"Our companies share common values — to maintain the highest standards and link great customers with great customer service," Sergot continued.

Nicolosi added: "I call this a ‘win-win-win' arrangement. VCFS is a win for Volvo customers because it will be an organization committed to providing a best-in-class ownership experience; it's a win for our retailers who will be able to offer their customers a complete captive solution for their financing needs; and it's a win for us because it will lead to higher customer satisfaction and increased sales volume."

Explaining the commercial financing Volvo dealers will gain, officials noted that VCFS will team with BofA to give them co-branded products. These will include floor planning, working capital loans and real estate loans.

"Bank of America already is a leading provider of commercial products for Volvo retailers, and with an enhanced captive product offer, we anticipate providing floor plan loans to a majority of our U.S. Volvo dealers," Nicolosi concluded.