Car finance

Car financing started with the General Motors Acceptance Corporation circa World War 1.

[1] The most common method of buying a car in the United States is borrowing the money and then paying it off in installments.

The dealer then typically sells or assigns that contract to a bank, credit union, or other financial institution.

[citation needed] These markups have been the focus of some regulatory scrutiny because they can cause variations in interest rates that are not correlated with credit risk.

[3] Dealer financing is an option automobile dealerships offer to customers purchasing a vehicle.

It is a significant source of profit for dealerships, with estimates suggesting that 78 percent of all cars are financed through this method.