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Move by Treasury Department helps free up loans for cars, trucks

November 17, 2010

The U.S. Treasury Department is establishing a new program to increase the availability of auto loans. The Federal Reserve’s $200 billion Term Asset-Backed Securities Loan Facility (TALF), announced Nov. 25, will facilitate the issuance and sale of securitized auto loans.

The National Automobile Dealers Association called the TALF "great news for consumers and auto dealers alike. These steps will go a long way in helping to restore the consumer confidence we need to return our industry and our country to economic stability."

The NADA also is working with the Federal Reserve and Treasury Department to clarify the TALF eligibility requirements, specifically as they relate to automotive floor plan securitizations.

There is a great need for wholesale automotive inventory loans, so the NADA has called upon the regulators to confirm that the TALF also extends to these vital loans.

This historic action demonstrates that the federal government is willing to help dealers get consumers shopping again, to improve the economy. Dealers can do their part by using this economic stimulus as leverage to get customers in the door.

It is vital that dealers make sure customers are fully aware of the new auto financing opportunities; and point out all the reasons why now really is a great time to buy a new car or truck. The CATA has made the latter the focus of its current media campaign.

Funding for the TALF comes from the $700 billion Emergency Economic Stabilization Act. Besides money for mortgage-backed assets, the Act devotes funds for auto loans, credit card receivables, and student loans.