Jul 17, 2013 Philip Burgess
In recent months, the Consumer Financial Protection Bureau (CFPB) has promoted a potential reform to auto lending policies.
According to Forbes, a number of House Republicans have challenged the CFPB's contention that auto dealers have too much control when setting interest rates and loan policies for car buyers. CFPB officials indicated that such practices open the industry up to discriminatory practices, but some Republicans in the House have questioned the claim, citing a lack of evidence.
Additionally, the source reported that many Republicans believe that the CFPB's desire to establish a uniform fee structure in favor of dealer-set interest rates would be detrimental to consumer concerns, as it would limit competition, which could drive up prices.
The internal structure of the CFPB has also raised some concerns, particularly with Rep. Spencer Bachus, R - Ala.,. Currently, there is just one director of the CFPB - Richard Cordray. However, Bachus recently drafted a bill that would create a five-person commission to control the agency, Forbes reported.
A number of stories regarding auto financing have dominated that headlines recently. U.S.News stated that the CFPB recently forced a pair of auto lenders to return $6.5 million that it claims the credit providers obtained via hidden fees. The returned fees were derived from what the CFPB indicated was a program that targeted U.S. veterans. One individual highlighted by U.S.News was required to pay a number of processing fees, despite them not being included on any of his monthly statements.
This shows how important it can be for auto lenders to be as transparent as possible. All lending agents at such enterprises should be well trained in industry best practices and how to effectively communicate with borrowers. By working closely with consumers so that they fully understand the stipulations of a loan, lenders can decrease the chances of having their practice challenged by the CFPB down the road.