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Auto credit must remain affordable, accessible for car buyers

August 1, 2014
By Mark Scarpelli, Chicago Metro NADA Director
Franchised new-car dealers do much more than sell cars. We provide service for the long term. And we offer our customers competitive financing options.
Dealer-assisted financing provides great value and competitive advantages, which saves our customers billions of dollars each year. And the proof is in the numbers. Despite the fact that dealer-assisted financing is always optional, a large majority of consumers still choose to finance their vehicles through dealers.
But in March 2013 — without prior notice or public comment — the Consumer Financial Protection Bureau issued guidance that could eliminate the flexibility that dealers have to negotiate lower auto financing rates for the benefit of consumers. Instead, the CFPB is pressuring auto finance sources to compensate dealers with a flat fee, which would weaken the ability of car buyers to secure discounted financing.
Most troubling is that the CFPB has even admitted that it has not studied how this change would impact consumers.  
Members of Congress have taken notice. Rep. Marlin Stutzman, R-Ind., introduced House Resolution 4811, "The Bureau Guidance Transparency Act," which passed the House Financial Services Committee on a bipartisan vote on June 11, thanks to strong grassroots support from the NADA and other industry trade groups.
The bill would require the CFPB to be more transparent by requiring prior public notice for other future guidance. The bill also would rescind the CFPB’s auto finance guidance issued in March 2013, which threatens to eliminate a dealer’s ability to offer interest rate discounts in the showroom.  
To help address the fair credit risk to consumers, dealers and finance sources, the NADA released its Fair Credit Compliance Policy & Program in January. This optional program provides a dealership which adopts it with a viable means of managing its fair credit risk, while still allowing for pricing flexibility. 
Chris Stinebert, the president and CEO of the American Financial Services Association, issued a statement on July 9 that strongly supported the NADA’s program, calling it "a legitimate tool that helps provide lenders with evidence that there are legitimate non-discriminatory reasons for pricing differences." 
The NADA is working to protect dealers — and our customers — by making sure auto loans remain affordable and accessible while still addressing fair credit risks. For more information on this matter, visit
In other news . . .
• Take advantage of the August congressional recess and invite your member of Congress to a dealership visit.
Members of Congress are in recess and have returned to their home districts through the Labor Day weekend. This is the perfect time to invite them to take a dealership tour, meet with employees and discuss legislative priorities. Elections will be held in November and the balance of power in the U.S. Senate is at stake, so now is a critical time to engage.
Advocacy is one of the most important aspects of a trade association. Despite the growth of social media, face-to-face meetings at the dealership with members of Congress are even more important today and can yield enormous benefits for dealers and for the NADA. Congress hears from many competing industry voices every day, so it is vital that the dealer’s voice is heard. 
The NADA’s legislative office will assist dealers in setting up the visits as well as provide issue updates and talking points to use and share. The visits can be arranged around your busy schedules and typically last about an hour. For more information or to schedule a visit, contact Patrick Calpin, the NADA director of grassroots advocacy, at (800) 563-1556 or