ELGIN, Ill. (NewsNation) — Big banks are putting the brakes on car dealerships, pulling back on lending, wreaking havoc across the auto industry and sending mom-and-pop shops into a tailspin.

At the car dealership, it’s the bank that typically owns the cars. But now, financiers are pulling out, forcing dealerships to put up the cash, making it especially challenging for small shops.

Jesse Torres, the manager at Butera Motors in Elgin, said that the West Coast and Nevada are particularly having a hard time with credit crunch right now.

“I know they’re having a tough time right now, where banks are just pulling out. They’ll wake up one morning and the bank is not there in their system. So, yeah, it’s going to get tough,” Torres said.

Since the start of 2023, Citizens Bank scaled down its auto loan portfolio from $14.5 billion in 2021 to $5-$6 billion by 2024. The CEO blamed the looming recession.

Other banks have followed suit, like Capital One, which pulled its floor plan financing business.

NewsNation reached out to other top floor plan lenders, like NextGear and Ally, but is still waiting to hear back.

It means dealerships will try to keep their floor plans as lean as possible, and those without enough cash at hand will go bankrupt, further monopolizing the car industry.

“Obviously your competition — big box stores and online stores — they have the only lending sources, so they have the edge in that respect,” said Malcolm Phillips, the owner of Phillips Auto in Newport Beach, California.

Small dealers, like Butera Motors, said they plan to be as strategic as possible during this time to stay afloat.

“Purchasing — like when we purchase a car — make sure we stay smart. Stay small for right now, and just ride this out,” Torres said.

Car experts said it is too early to determine how these bank pullouts will affect car prices. They suggested the best way to get the most bang for your buck is to shop at a dealership with a large inventory and wait to buy until the end of the month.