Car lenders and the Consumer Financial Protection Bureau are still at odds over auto loan lending practices. A few weeks ago, we reported how Ally Financial spoke out against the CFPB's proposal for restructuring practices for car loans. Now, the National Independent Automobile Dealers Association has made public comments to the CFPB in response to the bureau's request for input to its proposed changes to the Fair Debt Collection Practices Act.
The act, which was passed in 1977, was created as a way to level the playing field for all consumers who were experiencing debt collections as a result of being late on loan payments. The CFPB is considering changes to the federal rules that enforce the act that would directly affect debt collections on car loans.
The NIADA opposes the proposed changes, saying in a legal statement that the "risk of reputational harm to the creditor is sufficient to deter the creditor from engaging in the types of debt collection practices the FDCPA (law) intended to prohibit."
The NIADA represents nearly 20,000 independent car dealers who often provide direct financing, which these dealers promote as "Buy Here, Pay Here." NIADA regulatory counsel Shaun Petersen further explained that these dealers often "go to great lengths to ensure a positive customer experience," including sometimes paying for necessary repairs, stating that customers who have car repair troubles are at greater risk for being late or defaulting on their car loans.
The NIADA also stated that the CFPB has no evidence that any type of auto loans are a significant source of debt collections and that creating a debt collection verification process would be an "unnecessary burden" for its dealer members.
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Tara Baukus Mello writes the cars blog as well as the weekly Driving for Dollars column, providing both practical financial advice for consumers as well as insight into the latest developments in the automotive world. Follow her on Facebook here or on Twitter @SheDrives.