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     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.
     GOVERNMENT                                 CONSUMERS TAKE CHARGE                 AUTO FINANCE INDUSTRY ADVANCES
     Consumer Credit                            Consumers are more financially        Thirty to 40 years ago, one could secure
     Protection Act of 1968                     astute than they were 40 years        auto financing only through a dealership
     required creditors to disclose             ago, and actively shop around to      or bank. The introduction of multiple
     effective costs of financing               obtain the best terms on financing.   sources of financing for automobile
     to consumers.                              Research shows that most              purchases—credit unions, savings banks,
     The Federal Reserve Board                  consumers shop around before          loans from stock brokerage firms, home
     issued regulations and                     financing an auto, through the        equity loans, and even the Internet—has
     specified that consumers                   Internet or visits to multiple        created a highly competitive marketplace,
     must receive Truth in                      dealerships.                          resulting in lower rates for all consumers.
     Lending forms to review the                The relatively large number of        The improved availability of credit
     terms of the financing.                    consumers who do their                information makes it easier and less
                                                homework have effectively             costly to gauge a consumer’s credit
                                                lowered rates for all consumers.      worthiness than years ago. This
                                                                                      administrative savings is reflected in lower
                                                Today, studies show the vast          finance rates over the years.
                                                majority of consumers indicate
                                                that they felt they received          Dealerships have access to tremendous
                                                adequate information from their       funding power, with financing sources that
                                                creditor with which to make their     can borrow at lower wholesale rates—
                                                financing decisions.                  savings that can be passed on to
                                                                                      With information on financing rates so
                                                                                      readily available, and with such intense
                                                                                      inter-dealership competition, credit
                                                                                      sources (including dealers) have no choice
                                                                                      but to offer competitive rates, or risk
                                                                                      alienating potential customers.

     Americans Well-informed on
     Automobile Retailing Economics
     Educating consumers about auto financing

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