HISTORY OF CAR LOANS
There is a saying that we can not accurately shape the future if we don’t have a proper understanding of the past. An understanding of what history looks like helps in accurate sharpening and improvement of the future. The car loan is said to have officially originated in the year 1919, and this was when the general motors corporation, and this is when an automobile manufacturer founded in 1908 Flint, Michigan established the general motors acceptance corporation, which is the acronym with GMAC. This organization arose in response to the increasing demand for automobiles among American consumers after the end of first world war I. And as the car loan business expanded, other automobile manufacturers started developing their financing divisions that help people access car loans that made access to getting a car become easy.
One of the most prominent financing divisions then was the Ford Motor Credit Company which was founded in the year 1923, even all of these financing divisions ensured that at this time most American consumers during the first half of the twentieth century paid cash for their automobiles. Also, it was made known that traditionally car loans were then for short periods, generally about 24 months which is equivalent to 2 years and it doesn’t get beyond 36 months which is 3 years, however, as time goes by in the 1980s standard car loans period began to get longer than 24 to 36 months.
There were known two key reasons for this change, the first was that in the early year of the 1980s many consumers began to lease their cars, and this means that a certain amount is paid a monthly fee which in turn gave them the right to drive a particular car instead of purchasing the car outrightly. This development of car leasing which was quite flexible and easy made several people start tilting towards the direction of car leasing rather than car loan as a result of the shortness in its time of payment, and in turn, resulted in the extension of car loan payment so that people again can be interested in usage of the car loan. The second major reason that resulted in the extension of the time frame of car loan payment at this time was how much it costs to own a car at this time because as the years go by the price of cars gets on the high side and it becomes a luxury to own a car. As such it requires that more time is given for payment for people to get to consider getting a car, and another strong reason that can draw their attention away from car leasing which seems to be cheaper.