Ford Motor Credit Company LLC,

d/b/a A trade name, trading name, or business name is a pseudonym used by companies that do not operate under their registered company name. The term for this type of alternative name is fictitious business name. Registering the fictitious name with ...

Ford Credit, is the

financial services Financial services are service (economics), economic services tied to finance provided by financial institutions. Financial services encompass a broad range of tertiary sector of the economy, service sector activities, especially as concerns finan ...

arm of

Ford Motor Company Ford Motor Company (commonly known as Ford) is an American multinational corporation, multinational automobile manufacturer headquartered in Dearborn, Michigan, United States. It was founded by Henry Ford and incorporated on June 16, 1903. T ...

, and is headquartered in

Dearborn, Michigan Dearborn is a city in Wayne County, Michigan, Wayne County in the U.S. state of Michigan. An inner-ring Metro Detroit, suburb of Detroit, Dearborn borders Detroit to the south and west, roughly west of downtown Detroit. In the 2020 United States ...

. The predominant share of Ford Credit's business consists of financing Ford and Lincoln vehicles and supporting Ford and Lincoln dealers. Specifically, its business activities are concentrated in the area of automobile financing for consumers and dealership inventory and leasing. Ford Credit competes mainly on the basis of service and financing rate programs, including those sponsored by Ford. A key foundation of its service is providing broad and consistent purchasing policies for retail installment sale and lease contracts, and consistent support for dealer financing requirements across economic cycles. These policies have helped Ford Credit build strong relationships with Ford's dealer network that enhance competitiveness. Ford Credit also provides commercial financing and lines of credit to dealerships selling Ford Motor Company products. The firm also issues

commercial paper Commercial paper, in the global financial market, is an Unsecured debt, unsecured promissory note with a fixed Maturity (finance), maturity of usually less than 270 days. In layperson terms, it is like an "IOU" but can be bought and sold becaus ...

and other

debt Debt is an obligation that requires one party, the debtor, to pay money Loan, borrowed or otherwise withheld from another party, the creditor. Debt may be owed by a sovereign state or country, local government, company, or an individual. Co ...

instruments on Ford's behalf. Ford Credit also owns Lincoln Automotive Financial Services, the arm that finances Lincoln vehicles. Ford earned $2.63 billion EBIT with its Ford Credit segment in 2018, up from $2.31 billion in 2017. 2018 was the segment's highest full-year EBT in eight years. However, this upward trend may not last much longer as car sales continue to decline. Ford Credit's ROE, which fell from 22% in 2017 to 14% in 2018 forecasts the segment's coming decline.

History

Ford began its journey into auto financing by launching a Weekly Purchase Plan in 1923. The program was designed to allow people to pay a certain amount to the bank weekly up until they had saved for the cost of a car. In 1926, Ford constructed a new factory in Germany, but most of the local population could not afford a car. This prompted Henry Ford to found ''Credit AG für Ford-Fahrzeuge,'' German for '''Ford Credit Company AG , in

Berlin Berlin ( ; ) is the Capital of Germany, capital and largest city of Germany, by both area and List of cities in Germany by population, population. With 3.7 million inhabitants, it has the List of cities in the European Union by population withi ...

in order to help locals finance the purchase of a new car, in turn increasing sales. Henry and Edsel Ford became members of the board. In 1932, the newly-founded bank and the factory moved to

Cologne Cologne ( ; ; ) is the largest city of the States of Germany, German state of North Rhine-Westphalia and the List of cities in Germany by population, fourth-most populous city of Germany with nearly 1.1 million inhabitants in the city pr ...

. In 1962 the bank was renamed again to ''Ford Credit AG''. From 1975 to 1979, the company briefly was the owner of the

Houston Astros The Houston Astros are an American professional baseball team based in Houston. The Astros compete in Major League Baseball (MLB) as a member club of the American League (AL) American League West, West Division. They are one of two major leag ...

major league baseball team, as well as of its ballpark,

the Astrodome The NRG Astrodome, formerly and also known as the Houston Astrodome or simply the Astrodome, was the world's first Multi-purpose stadium, multi-purpose, stadium#Types, domed sports stadium, located in Houston, Texas, United States. It seated ar ...

, and various other properties around

Houston, Texas Houston ( ) is the List of cities in Texas by population, most populous city in the U.S. state of Texas and in the Southern United States. Located in Southeast Texas near Galveston Bay and the Gulf of Mexico, it is the county seat, seat of ...

. This occurred after Astros owner Roy Hofheinz defaulted on a loan provided in 1972 by the Company in partnership with

GE Capital GE Capital was the financial services division of General Electric. Its various units were sold between 2013 and 2021, including the notable spin-off of the North American consumer finance division as Synchrony Financial. Ultimately, only one div ...

. The default resulted from a downturn in the oil industry, and the creditors took over these various assets as a result. Senior loan officer Bill Odom, who would later rise to be the Chairman of Ford Motor Credit Company, acted as principal for the temporary ownership group, until the team was sold in 1979 to a group headed by John McMullen.Mary Connelly: "Ford 100: Houston Astros become diamond in the rough for Ford", ''Automotive News'', June 19, 200

/ref> Since the automotive industry crisis of 2008–10, Ford Credit has been the only financial arm of Detroit's "Big Three" still owned by its parent automaker after the spinoff of GMAC (now

Ally Financial Ally Financial Inc. (known as GMAC until 2010) is an American bank holding company incorporated in Delaware and headquartered at Ally Detroit Center in Detroit, Michigan. The company provides financial services including car finance, online bank ...

) by

General Motors General Motors Company (GM) is an American Multinational corporation, multinational Automotive industry, automotive manufacturing company headquartered in Detroit, Michigan, United States. The company is most known for owning and manufacturing f ...

and the purchase of

Chrysler FCA US, LLC, Trade name, doing business as Stellantis North America and known historically as Chrysler ( ), is one of the "Big Three (automobile manufacturers), Big Three" automobile manufacturers in the United States, headquartered in Auburn H ...

Financial (now TD Auto Finance) by

Toronto-Dominion Bank Toronto-Dominion Bank (), doing business as TD Bank Group (), is a Canadian multinational banking and financial services corporation headquartered in Toronto, Ontario. The bank was created on February 1, 1955, through the merger of the Bank of ...

References

External links

* * {{Authority control Financial services companies established in 1959 Companies based in Wayne County, Michigan Financial services companies of the United States

Credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...