Former Capital Bank executives on Tuesday launched the Funding Corporation with £115m of investment, including £25m from Subaru, Isuzu and Daihatsu importer IM Group.
The business expects to make loans totalling more than £1bn in its first five years. A spokesman said: "We will mount a direct challenge to the increasing domination of the motor finance marketplace by large providers."
IM Group's existing wholesale and retail finance for its dealers is unaffected.
The Funding Corporation managing director is Jim Rowley, former general manager of Bank of Scotland subsidiary Capital Bank Motor. He was previously managing director of Forthright Finance, Capital Bank Motor's independent dealer finance arm.