Auto Dealers are Lenders Too
The Senate is currently debating S. 3217, the Restoring American Financial Stability Act of 2010. Among the many, many, many amendments proposed to the bill, there is one that would carve out auto dealers from the jurisdiction of the Consumer Financial Protection Bureau (CFPB).
If you’ve ever bought a car, you might be familiar with the pressure to get your car financing on the spot at the dealership. (Personal side note: when I bought my first car at age 22, I also walked away with a car loan and barely knew I had it. I can say from experience that you’re much more likely to get a good deal if you arrange your financing through a credit union or local bank.)
Auto dealers are consistently the top source of consumer complaints to the Better Business Bureau and state and local consumer protection agencies. Abusive loans are all too common – and if you’re a person of color or a member of the military, you are especially likely to recieve an unfair car loan. The military has gone so far as to say that abusive car loans are affecting military readiness.
All of this is to say: anyone who makes car loans (ahem, that’s you, car dealerships) needs to be regulated by the Consumer Financial Protection Bureau. The Senate should vote NO on the Brownback amendment which would give dealerships a special exemption. The House caved into lobbyist pressure and gave them this exemption in their bill last year, but the Senate must stand strong and side with consumers.
AFR has compiled excellent documents on this topic. Here’s where you can read more:
(Photo: Danilo Prates)