Latest Auto Lending News
Here are the latest news in the world of consumer auto lending. Stay informed on the latest practices affecting the cost of your next car loan and vehicle.
- Ally Pays $98M to Settle Car Loan Bias Charge
USA Today 20 Dec 2013
The Consumer Financial Protection Bureau (CFPB) and the Department of Justice on Dec. 20 ordered Ally Financial and Ally Bank to pay $80 million to borrowers and $18 million in penalties in the largest auto loan discrimination settlement in history. More than 235,000 African-American, Hispanic, and other minority car loan borrowers allegedly received unfair interest rates through Ally Financial, according to federal regulators.
- Auto Loan Balances -- and Delinquencies -- to Rise in 2014: Report
U.S. Banker 13 Dec 2013
TransUnion released a forecast on Monday concluding that 2014 will be a mixed bag for automobile lenders, with both delinquency rates and loan balances expected to rise. The auto loan delinquency rate has been steadily increasing since hitting a post-crisis low in mid-2012, and TransUnion expects the slow climb to continue next year. The credit bureau projects the rate of borrowers 60 or more days past due to rise to 1.19 percent by the end of 2014, from an estimated 1.10 percent at the end of this year.
- Scrutiny Over Disparity in Loan Fees at Auto Dealerships
New York Times 22 Nov 2013
Auto dealerships often arrange loans for car buyers through third-party lenders, deciding how much they want to charge for that service and tack their fee onto the lender's interest rate. The National Automobile Dealers Association says franchise dealers typically do not charge more than 1 percent interest on average, but some consumer groups say that average fees range from 2 percent to 2.5 percent, depending on the terms.
- Dealer Fees for Arranging Car Loans Are Drawing Scrutiny From U.S.
New York Times DealBook Blog 22 Nov 2013
For the 80 percent of consumers who need financing when purchasing a car, many U.S. dealers arrange loans via third-party lenders. Dealers decide how much they want to charge for that service and add the fee to the lender’s interest rate. Because dealerships do not have to disclose how much of the interest rate goes to them, many consumer advocates and regulators have raised concerns about discriminatory lending against minorities.
- Justice Department Teams With CFPB in Probe of Possible Discriminatory Auto Financing
Washington Post 15 Nov 2013
Government regulators are launching efforts to prevent car dealers from jacking up the cost of financing to women and minorities. Dealers can mark up the interest rate on vehicle loans arranged through lenders, which can increase the profit on a sale by hundreds of dollars. Advocacy groups have been warning, however, of disparities in the number of black and Latino borrowers subjected to these higher fees; and they question whether the practice is tantamount to illegal, unfair lending.
- Cordray Vows 'Openness' with Auto Lenders
American Banker 13 Nov 2013
Consumer Financial Protection Bureau Director Richard Cordray acknowledged concerns Nov. 12 about how the agency is regulating indirect auto lenders, promising to be more transparent about its oversight.
- Ally Financial Warns of Auto-Lending Probe
Wall Street Journal 06 Nov 2013
Ally Financial Inc. disclosed this week in a regulatory filing that the Consumer Financial Protection Bureau (CFPB) is increasing its scrutiny over its auto lending practices. The agency has notified Ally that it had not taken adequate steps to prevent auto dealers from violating laws against lending bias, according to the filing.
- CFPB Continues Crackdown on Auto Lending Industry
American Banker 05 Nov 2013
Several auto lenders being probed by the Consumer Financial Protection Bureau for potential fair lending violations are being referred to the Department of Justice, sources say. Sources said at least three lenders, which have not been publicly identified, have been notified by the CFPB about the referral.
- Many Used-Car Loans Are Lemons
MarketWatch 04 Nov 2013
Used-car buyers paid an average of 8.56 percent the second quarter to finance their purchase, compared to 4.46 percent for buyers of new vehicles, according to Experian.
- Auto Loans Move Into Slow Lane
USA Today 29 Oct 2013
Some financial experts are throwing up a red flag as buyers of new vehicles increasingly spread their payments out over longer periods of time. Data from Experian Automotive indicates that most new-car loans, 41.7 percent, are repaid over a period of 61 to 72 months. But the share of borrowers taking 73 to 84 months to pay for a new auto has jumped by more than 25 percent over the past year to now account for 19.5 percent of the market.