Automotive News Finance & Insurance Blogs

3 steps to regulatory compliance

Posted 12:15 pm U.S. ET, June 24
blogs Hannah Lutz is a staff reporter covering finance and insurance for Automotive News.
 
Dealers: To stay out of trouble with regulators, clean up compliance. It sounds like an obvious solution, but what do dealers need to do to be sure compliance is up to par? Invest in a strong compliance management system, says Nick Smyth, a financial services regulatory attorney at Reed Smith law firm. Dealers should: 1. Hire enough compliance staffers. 2. Separate those staffers from sales a ...
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The advantages for going online with F&I

Posted 12:00 pm U.S. ET, June 17
blogs Hannah Lutz is a staff reporter covering finance and insurance for Automotive News.
 
To reduce the push and pull around F&I product options and avoid surprising consumers with unexpectedly higher monthly payments as F&I products are added on, dealerships should introduce F&I online. Monthly payment cost is on the top of consumers’ minds when buying or leasing a vehicle, according to Jason Barrie, senior director of market performance at Dealertrack Technologies. ...
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A case for breaking the 300% rule

Posted 11:45 am U.S. ET, June 17
blogs Jamie LaReau covers the automotive retail beat for Automotive News.
 
Most F&I folks subscribe to the “300 percent rule”: Offer 100 percent of the products to 100 percent of the dealership’s customers 100 percent of the time. But a recent conversation with a friend makes me think the rule doesn’t apply to 100 percent of cases. My friend just bought a new sedan. He shopped a few dealerships and was well-researched on prices. He knew what ...
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Why credit bureaus' loan data vary

Posted 11:00 am U.S. ET, June 10
blogs Hannah Lutz is a staff reporter covering finance and insurance for Automotive News.
 
The three major credit bureaus, TransUnion, Experian and Equifax, publish their auto finance data in spurts throughout the year, usually a week or two apart from one another. But one thing always stops me when reporting the data: The trends are the same, but the numbers don’t match up. For example, TransUnion said the 60-day delinquency rate for auto loans during the first quarter was 0.99 ...
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How credit unions, as a group, will become the largest auto lender

Posted 11:45 am U.S. ET, June 3
blogs Jim Treece is retail editor for Automotive News.
 
Credit unions as a group, largely working through Credit Union Direct’s CUDL platform, are poised to become the largest single lender to auto buyers -- eventually. Here’s how. First, a disclaimer. I moderated a panel of dealers at a conference in May sponsored by Credit Union Direct. Hearing four dealer panelists and a roomful of credit union representatives talking, sometimes bluntly ...
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F&I providers and lenders, here's your chance to fulfill dealers' dreams

Posted 11:30 am U.S. ET, May 27
blogs Jamie LaReau covers the automotive retail beat for Automotive News.
 
Attention F&I product providers and lenders: Dealers want your help. As the gross profit margins on new-vehicle sales continually narrow, dealers are worried about the future and where the profits on the sales side will come. The F&I office is an obvious place. But to keep it that way, dealers have a wish list that only F&I product providers and lenders can fulfill. But first it&rsq ...
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Uber, credit-challenged drivers walk the subprime tightrope

Posted 12:00 pm U.S. ET, May 20
blogs Hannah Lutz is a staff reporter covering finance and insurance for Automotive News.
 
While some auto industry experts fear that too many subprime loans could help trigger another financial crisis, Uber is throwing more risky loans into the mix. According to a story last week by American Public Media’s Marketplace.org, ride-sharing company Uber joined the subprime market in late 2013 with a finance program that aims to help credit-challenged drivers own vehicles. Uber conne ...
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Is the F&I product space overcrowded? Views differ

Posted 11:45 am U.S. ET, May 13
blogs Jamie LaReau covers the automotive retail beat for Automotive News.
 
How hot is the competition getting in the F&I product space? So hot that “the future of finance is in consulting,” said Damien Bullard, co-founder of IDDS Group. That’s a bold statement given that part of IDDS’ business comes from selling finance and insurance products from other providers. The New York company also consults and trains in dealerships’ F&I, v ...
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CFPB plays up auto finance complaints

Posted 11:00 am U.S. ET, May 6
blogs Jim Henry is a special correspondent for Automotive News.
 
A new report released by the Consumer Financial Protection Bureau covering more than three years of complaints by military service members shows that although gripes about auto loans were a small part of the mix, they were a large part of the CFPB’s enforcement actions. In the report released last week, which lists 29,500 complaints collected from July 2011 to Dec. 31, 2014, there’s n ...
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Finally, a lender owns up

Posted 11:45 am U.S. ET, April 29
blogs Jim Henry is a special correspondent for Automotive News.
 
Auto lenders carefully avoid naming their competitors, especially when they want to criticize. It’s always the unnamed other guy who gets “aggressive” in approving loans, making life harder, and -- shudder -- potentially riskier for everybody else. That’s why it was refreshing this week when Jeffrey Brown, CEO of Ally Financial Inc., figuratively raised his hand on Tuesda ...
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Auto finance critic Warren stands firm on CFPB dealership oversight

Posted 11:15 am U.S. ET, April 22
blogs Jim Henry is a special correspondent for Automotive News.
 
Sen. Elizabeth Warren is once again calling for direct regulation of auto dealerships by the Consumer Financial Protection Bureau. In a stinging speech last week, she also advocated for what amounts to a ban on dealer markup on auto loans and equated auto loans with “the pre-crisis housing market,” which helped bring about the 2008-09 recession. “It’s no coincidence&rdquo ...
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Women in automotive seek more peers

Posted 12:15 pm U.S. ET, April 15
blogs Jim Henry is a special correspondent for Automotive News.
 
NEW YORK -- A lot of dealer principals and general managers swear by their female salespeople and F&I managers and wish they had more. But in the business world at large, auto industry careers for women are a “best-kept secret,” according to panelists at a conference hosted by the Women’s Automotive Association International this month in conjunction with the New York auto s ...
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Lenders' outcry against CFPB 'narratives' is justified

Posted 12:01 am U.S. ET, April 8
blogs Jim Henry is a special correspondent for Automotive News.
 
It’s no wonder auto lenders cried foul last month when the Consumer Financial Protection Bureau announced its plan to begin posting consumers’ first-person tales of their grievances with auto loans later this year. Lender trade groups issued statements complaining that publishing unverified, and conceivably false, narratives online could not only harm lenders’ reputations unjust ...
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No such thing as 'little' lies on credit apps

Posted 11:00 am U.S. ET, April 1
blogs Jim Henry is a special correspondent for Automotive News.
 
The Federal Trade Commission served up a forceful reminder last week that inflating a customer’s income on a credit application isn’t just a little white lie, even if it’s intended to “help” the customer. Besides possibly saddling the customer with a loan he or she can’t afford, it’s potentially bank fraud, FTC officials said. “This is felony fraud ...
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If dealers don't weigh in, they can't gripe

Posted 12:30 pm U.S. ET, March 25
blogs Jim Henry is a special correspondent for Automotive News.
 
Dealers have a chance right now to weigh in on what they like and don’t like about their lenders, and they shouldn’t miss the opportunity. The survey period for the J.D. Power U.S. Dealer Financing Satisfaction Study is at about the halfway point. Questionnaires went out via mail and email on March 1 and will be in the field through April. This year’s results should be published ...
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Size of average tax refund makes a decent down payment

Posted 11:45 am U.S. ET, March 18
blogs Jim Henry is a special correspondent for Automotive News.
 
For anybody keeping track -- which is to say, anybody interested in subprime auto lending – U.S. tax refunds have fallen a bit more behind than they were a few weeks ago. Tax refund season is typically the high point of the year for subprime auto loans. The IRS reported in a March 12 update that it had processed around 54.3 million refunds -- valued at about $162.1 billion -- as of March 6 ...
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Congressmen get testy with CFPB chief Cordray

Posted 11:45 am U.S. ET, March 11
blogs Jim Henry is a special correspondent for Automotive News.
 
The Consumer Financial Protection Bureau and its critics on the House Financial Services Committee traded jabs in a tense session last week as CFPB Director Richard Cordray presented the bureau’s semiannual report. Committee Chairman Jeb Hensarling, R-Texas, used the occasion to advocate again that a bipartisan committee should lead the CFPB, not a single director. Hensarling repeated the ...
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The auto fallout from tax refund delays

Posted 11:45 am U.S. ET, March 4
blogs Jim Henry is a special correspondent for Automotive News.
 
Tax refund season is typically the high point of the year for subprime auto lenders, but so far the early tax refund statistics are down slightly from a year ago. Through Feb. 20, the IRS had processed about 40 million refunds, down 1.1 percent from a year ago. The average refund was slightly higher at $3,210 vs. $3,116 tallied from Jan. 1 through Feb. 21, 2014, the IRS said. Tax refunds seem to ...
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Lender groups want answers from the CFPB

Posted 12:15 pm U.S. ET, Feb. 25
blogs Jim Henry is a special correspondent for Automotive News.
 
A letter sent last week by the American Financial Services Association and other trade associations to Richard Cordray, director of the Consumer Financial Protection Bureau, was aimed at prodding the CFPB to publicly respond to a study AFSA commissioned last year. “There certainly has been more than enough time for them to address some of the issues,” Chris Stinebert, CEO of AFSA, tol ...
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GM Financial-Chevy lease exclusivity seems likely

Posted 11:15 am U.S. ET, Feb. 18
blogs Jim Henry is a special correspondent for Automotive News.
 
There wasn’t much doubt, but General Motors disclosed for the first time in an SEC filing on Feb. 4 that it is considering plans to throw all Chevrolet lease incentives to GM Financial instead of sharing them among GM Financial, Ally Financial and U.S. Bank. GM Financial became GM’s exclusive preferred lease lender for the Buick and GMC brands this month and will take over those dutie ...
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Are flat finance fees inevitable? How to lessen the blow

Posted 11:30 am U.S. ET, Feb. 18
blogs Jamie LaReau covers the automotive retail beat for Automotive News.
 
Flat finance fees are coming. And if you now derive more than 40 percent of your F&I revenue per vehicle from a finance reserve, you’re in trouble. So says Larry Dorfman, CEO of F&I provider EasyCare. He warned that flat fees are on the horizon during a conversation on the sidelines of the National Automobile Dealers Association convention in San Francisco last month. Last week I ...
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A positive outlook for e-contracting

Posted 12:01 am U.S. ET, Feb. 11
blogs Jim Henry is a special correspondent for Automotive News.
 
When it comes to e-contracting, maybe the glass is finally more half full than half empty. Consider that e-contracting accounted for 56 percent of U.S. contracts for Ford Motor Credit Co. in 2014, according to Joy Falotico, executive vice president of marketing, sales and the Americas at the captive. Meanwhile, Toyota Financial Services said in September it was on track to generate 65 percent of ...
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Ally's Carpenter leaves on a high note

Posted 11:45 am U.S. ET, Feb. 4
blogs Jim Henry is a special correspondent for Automotive News.
 
Michael Carpenter, who retired as CEO of Ally Financial on Monday, can leave saying, “Mission accomplished.” On Carpenter’s watch, Ally repaid its U.S. government bailout plus a profit for taxpayers and freed itself of government ownership, effective in December. At the tail end of 2008 the U.S. Treasury rescued Ally’s predecessor company, GMAC, in the runup to General Mo ...
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Auto lenders cite discipline with U.S. sales booming

Posted 11:00 am U.S. ET, Jan. 28
blogs Jim Henry is a special correspondent for Automotive News.
 
SAN FRANCISCO -- “Discipline” was the watchword for auto lenders in panel discussions and interviews in and around the National Automobile Dealers Association convention here last week. Thasunda Duckett, CEO of Chase Auto Finance, repeatedly cited “prudence and discipline” in prepared remarks at a J.D. Power panel and in an interview afterward. Other competitors hit the s ...
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The lesson of the pizza delivery man

Posted 11:00 am U.S. ET, Jan. 21
blogs Jim Henry is a special correspondent for Automotive News.
 
Here’s a lesson for dealerships that run security cameras in the F&I office and elsewhere: Treat all store visitors well. A used-car dealership outside New Bedford, Mass. probably regrets -- an assumption, because the store’s not answering the phone -- chiseling a pizza delivery guy out of a tip, an episode captured on security cameras that somehow made its way onto social media l ...
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