Automotive Financing in Mexico: Legal Keys for Brands Entering the National Market

07 / 17 / 25

Automotive Financing in Mexico: Legal Keys for Brands Entering the National Market

MEXICO CITY, MEXICO, July 17^th, 2025 – In a highly competitive automotive market like Mexico, offering financing—whether in-house or through partnerships—is not a secondary option, but a strategic tool essential for achieving greater market penetration, operational efficiency, and profitability. For automotive brands entering the country, understanding the legal framework governing financing schemes is crucial not only to increase sales, but to do so with legal certainty and risk control.

In Mexico, according to data from the Mexican Association of Automotive Distributors (AMDA), more than 60% (sixty percent) of new vehicles are placed through financing, whether through traditional credit, financial leasing, or hybrid schemes with guaranteed residual value. This makes financing a structural component of the business model.

Having a captive finance company (linked to the manufacturer), or at least a strong alliance with a local financial institution, accelerates inventory turnover, improves customer loyalty capabilities, and allows for the implementation of differentiated commercial programs compared to the competition.

To offer financing to their clients, automotive distributors mainly have two (2) options:

a) Establish a SOFOM (Multiple Purpose Financial Company), which can be either a non-regulated entity (E.N.R.) or a regulated entity (E.R.), depending, among other factors, on whether said SOFOM raises funds from the public. For this option, it is worth considering the time required to incorporate such entity and complete the administrative procedures to obtain the necessary authorizations from the relevant authorities to operate as a SOFOM.

b) Partner with a local bank or SOFOM.

Through agreements with a financial institution, the distributor can benefit from the existing financial infrastructure. This helps reduce direct regulatory burden, but limits control over the financial product offered to customers.

As automotive financing is considered a financial activity linked to consumer credit, it is subject to the oversight of various Mexican authorities, mainly the National Commission for the Protection and Defense of Financial Services Users (CONDUSEF) and the National Banking and Securities Commission (CNBV).

To offer financing products in Mexico, financial institutions must comply with the following key regulatory aspects:

• Register their standard form contracts with CONDUSEF through the Registry of Adhesion Contracts (RECA), which must specify the loan amount, applicable interest rates, total annual cost (CAT), applicable fees (for origination, management, early payments, etc.), penalties for default, applicable guarantees, conditions for extrajudicial enforcement, and clear information on any mandatory or bundled insurance.

• Regarding advertising, Mexican law sets out guidelines to ensure that financial product advertising provides the public with truthful and clear information in order to avoid misleading consumers and to help identify the entity offering the financial service.

Another important legal aspect to consider relates to guarantees to secure payment without losing efficiency. Financing contracts must include guarantees that are effective, enforceable, and registrable, such as: (a) retention of title, which allows the vehicle to remain in the seller’s name until the debt is paid in full; (b) pledge without transfer of possession, which allows enforcement against the vehicle upon default; and (c) in the case of corporate or fleet sales, the creation of guarantee trusts. It is essential to register such guarantees with the Sole Registry of Movable Guarantees (RUG).

Proper design and structuring of guarantees reduces default rates and improves recovery value in case of non-compliance.

Other relevant considerations include (a) having a solid framework in place for extrajudicial collection management that complies with applicable legislation, to avoid sanctions from the authorities; and (b) implementing a sound protocol for managing overdue portfolios and recovering credits.

For a new automotive brand in Mexico, offering financing is a strategic growth lever. However, doing so without a clear legal structure can result in hidden costs, penalties, or litigation that may affect profitability.

Having an adequate legal architecture—including validated contracts, registered guarantees, and strict regulatory compliance—allows brands to accelerate placements, reduce financial risks, and maximize their return on investment in the country.

The full article was made in collaboration with Lexlatin, and you can find the original article in Spanish herein: https://lexlatin.com/opinion/financiamiento-marcas-distribuidores-automotriz-mexico-sofom

All the information placed in this article and the rights of distribution belongs to @Lexlatin.