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NADA chairman supports financing transparency, but opposes rate caps

November 22, 2010
The matter of dealer-arranged financing is "a hot issue," said Jack Kain, and one about which he is prepared to travel far and wide to speak. Kain's travels took him to San Diego March 18, to a convention of Illinois and Missouri dealers. Kain, the 2005 chairman of the NADA, reviewed the association's developing national campaign to educate consumers and the government on auto financing. A proposal in California would set a $150 limit on dealer profit for arranging loans, and several states recently enacted rate caps. But Kain said the industry is not complacent, and he pointed to the 2.5 percent to 3 percent caps that already have been adopted by the major finance companies. "Transparency in the process is there. More regulations are unnecessary," Kain said. "Most retail car buyers can't get the same rates that dealers can get," he said. "And economic evidence shows dealers do not charge more to customers than the banks would." "The greatest challenge," said Kain, "is in the court of public opinion. But most customers are happy with their dealers," according to a survey commissioned by Automotive Retailing Today. The NADA campaign promotes four messages: • Dealerships offer the convenience of one-stop shopping; • Dealerships have access to many credit sources; • Dealerships offer competitive rates and have exclusive access to manufacturer incentives and discounts; and • Customers unhappy with the finance terms offered through a dealership can refinance elsewhere without penalty. "Every customer," said Kain, "should be treated in an open and honest manner and be well informed about all aspects of the transaction."