Auto Financing: A Historical Perspective

Increased competition in the auto finance industry and improved information available to both consumers and creditors have both increased the availability of credit to consumers and improved the price of that credit over the last 30 to 40 years.


The Consumer Credit Protection Act of 1968 required creditors to disclose effective costs of financing to consumers. The Federal Reserve Board issued regulations and specified that consumers must receive Truth in Lending forms to review the terms of the financing

Consumers Take Charge

Research shows that most consumers shop around before financing an auto, through the Internet or visits to multiple dealerships. The relatively large number of consumers who do their homework have effectively lowered rates for all consumers. Today, studies show the vast majority of consumers indicate that they felt they received adequate information from their creditor to make their financing decisions.

Auto Finance Industry Advances

Thirty to 40 years ago, consumers could secure auto financing only through a dealership or bank. The introduction of multiple sources of financing for automobile purchases — credit unions, savings banks, loans from stock brokerage firms, home equity loans and even the Internet — has created a highly competitive marketplace, resulting in lower rates for all consumers.

The improved availability of credit information makes it easier and less costly to gauge a consumer’s credit worthiness than years ago. This administrative savings is reflected in lower finance rates. Dealerships have access to tremendous funding power, with financing sources that can borrow at lower wholesale rates— savings that can be passed on to consumers.

Download Auto Financing A Historical Perspective Document


Recognizing the need for consumer education, automotive industry leaders have formed AWARE (Americans Well-informed on Automobile Retailing Economics), a collaborative industry effort to provide consumers with information, tools, and other resources to better understand the auto financing system.