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.
- Charlotte Car Dealership Accused of Predatory Lending Practices Against Blacks
Associated Press 13 Jan 2014
The federal Department of Justice, along with state prosecutors in North Carolina, has filed suit against a pair of "buy here pay here" auto dealerships that are charged with preying on African ...
- FTC Cracks Down on Deceptive Auto Dealer Ads
USA Today 09 Jan 2014
Nine U.S. auto dealers with operations in six states have agreed to settle with the Federal Trade Commission (FTC) as part of the agency's campaign against shady dealer advertising. The dealers allegedly made misrepresentations such as deceptive low-payment deals; and some advertised zero-down finance deals that, in fact, carried sizable fees.
- 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.
- 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.
- Automakers’ Lending Practices Probed by U.S. for Bias
Bloomberg Businessweek 20 Sep 2013
The Consumer Financial Protection Bureau (CFPB) and the Justice Department are investigating the lending operations of several major auto manufacturers, looking for possible discrimination.
- Credit Spigot Opening Up for Subprime Auto Borrowers
U.S. News & World Report 16 Jul 2012
Credit remains tight for most Americans, but auto financing is the exception. In recent months, consumers have found it increasingly easy and cheap to borrow money for vehicle purchases. New auto bank loans reached a seven-year high between January and March 2012, Equifax reports. The trend even applies to subprime borrowers. "The feeling is there is more loosening in auto lending than there has been and will be in other sectors of the consumer credit world," notes Andrew Jennings, chief analytics officer at FICO. The increase in auto lending is partly due to higher demand for cars and trucks to replace older vehicles. Additionally, auto loans tend to be less risky for lenders, with traditionally lower delinquency rates. Cars and trucks also are easier to repossess than homes. "It's not like a house where you stop making the payments and they take two years to kick you out of the house," explains Bankrate.com senior financial analyst Greg McBride. "You miss two car payments and it's not going to be in the driveway in the morning." However, even as borrowers with subprime credit have more access to credit, it comes with higher interest rates.
- Rate of Late Auto Loan Payments Sinks to Lowest Level Since 1999 in 1st Quarter
Associated Press 22 May 2012
The pace of late payments for auto loans fell nationwide in the first three months of the year to the lowest level in more than a decade, even though lenders have granted financing for more high-risk borrowers. For the 2012 first quarter, the rate of U.S. auto loan payments 60 days or more past due declined to 0.36 percent, about 27 percent lower than the same period of last year, according to TransUnion. That also is down about 22 percent from the fourth quarter of 2011. The latest rate is the lowest since TransUnion began tracking auto loan data in 1999. Auto loan delinquencies have been trending downward on an annual basis for the last 10 quarters in a row -- in part because, after the last recession, many borrowers opted to pay their car notes ahead of their mortgage, credit cards, and other debts.
- The Color of Money: Pay for Car With Cash, You'll Reap the Payoff
Columbus Dispatch (OH) 20 May 2012
While it may seem like common sense, some consumers are unaware that they can buy a vehicle with cash as an alternative to getting caught up in predatory auto financing. Edmunds.com recently announced the launch of its "Debt-Free Car Project," which aims to teach consumers to purchase a reliable used car for less than $5,000 in cash. The site editors developed the project due to concerns over "buy here, pay here" used car outlets. Consumer advocates have long criticized dealers who prey on vulnerable individuals by offering car loans at high interest rates. According to Edmunds, buyers are often working to save about $3,000 to purchase a reliable car. "We were thinking, 'Why don't people buy a car outright,'" said Ronald Montoya, Edmunds.com Consumer Advice Editor. "If they are putting down deposits of $3,000, then that's more than enough to buy a car that is reliable." As part of the campaign, Edmunds staff purchased a 1996 Lexus for $3,800. The team plans to track and write about the vehicle's performance over the next year.
- Returning Veterans Can Lower Credit Card Interest Rates
KSTP Eyewitness News ABC 5 (Minnesota) 16 May 2012
Although not widely known, the 2003 Servicemembers Civil Relief Act (SCRA) offers valuable protections for current and past members of the U.S. military. Under it, deployed veterans can serve out their missions overseas without worrying about finances. For example, the law prevents banks from foreclosing on veterans who are deployed. This applies not only during the active-duty period but also for nine months after. During this time, creditors cannot foreclose or repossess items from veterans without a court order allowing them to do so. The SCRA also caps loan interest rates at 6 percent while enlisted persons are on active duty, a limit that also applies to credit cards, auto loans, and business financing. Veterans who send a letter to lenders to request the 6 percent cap, within 180 days of coming home, are entitled to a credit or refund if their loan is fully paid.