Consumer Sensitivity to Interest Rates: An Empirical Study of New Car Buyers and Auto Loans

ALTHOUGH it has never been clear whether the consumer needs to be protected from his own folly or from the rapaciousness of those who feed on him, consumer protection is a topic of intense current interest in the courts, in the legislatures, and in the law schools. A number of recent court decisions have attempted to attack problems confronting the consumer; unfortunately, these judicial efforts have succeeded primarily in disclosing the limitations in the courts' ability to deal with such problems. State and federal legislative bodies have pursued more carefully designed remedies. Congress has passed the Truth-in-Lending Act; the National Conference of Commissioners on Uniform State Laws has proposed the Uniform Consumer Credit Code; and many states have enacted retail installment sales acts to update and supplement their long-standing usury laws.

These legisJative and judicial acts have always relied, at best, on anecdotal knowledge of consumer behavior. In this Article we offer the results of an empirical study of a small slice of consumer behavior in the use of installment credit.