Did Usury Ceilings Hold Down Auto Sales?
Usury ceilings have been implicated, along with persistently high interest rates, as culprits in the long, deep slump in the automobile sector that occurred in the late 1970s and early 1980s. As the prime rate rose from the 6-8 percent range of 1977 to 20 percent in 1981, lenders in many states were restricted from charging higher rates for automobile financing by long-standing usury ceilings. Over the same period retail sales of passenger cars fell from over 11 million in 1977 and 1978 to 8. 5 million in 1981.
