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Car loans under CFPB scrutiny

By Tara Baukus Mello · Bankrate.com
Wednesday, March 20, 2013
Posted: 10 am ET

At least four banks are being investigated for possible discrimination against certain new-car buyers by unfairly marking up interest rates on their car loans. According to a Bloomberg report in late February, the Consumer Financial Protection Bureau, or  CFPB, was looking into discriminatory practices on car loans. Since the initial report, Ally Financial has said in a government filing that it is being investigated by the CFPB for some of its retail financing practices.

The CFPB was established as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Among the federal agency's duties are to write rules and enforce federal consumer protection laws as well as to investigate consumer complaints of unfair, deceptive or abusive acts or practices among companies that provide all types of consumer financial products or services, including new- and used-car loans.

Parts of the law have been contested by the banking industry. But when it originally was written, auto dealers were excluded from the oversight of the CFPB. However, banks weren't, and the CFPB has been fielding complaints about auto loans from banking institutions.

Do you have a car loan from the bank? Do you think you were treated fairly?

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.

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15 Comments
Chuck
March 22, 2013 at 12:46 am

You all need to watch ally. The way they post their payments. If you pay extra, Ally doesnt post it against the principle; they hold the extra dollars in reserve, trying to trick you into paying the lower payment next month. Every dollar you pay extra should be applied directly to the remaining principle due. They do not give you an option on this either... this way they can manipulate actual intrest and payments in their favor...keeping you from paying you loan off early and in reality increasing the intrest they collect. I have been fighting with them on this process for over 24months now....they just will not do it right.

Steve
March 22, 2013 at 12:41 am

I went in to purchase a new truck for my business before the end of last year for tax purposes. The dealer found the truck, ran my credit, made me a deal with financing at 3.5% then it comes back from the finance dept. and suddenly the rate goes up to 32%. I walked out and never bought the truck. I did just buy a car, from a dealer, for cash. The only way to protect yourself from the crooked car dealers.

SS
March 22, 2013 at 12:29 am

Richard.....the bank doesn't set the interest rate...the dealer did....the bank gives a dealer their lowest rate and they can mark up from there.......rates are varied due to advance, DTI, PTI, down payment, overall credit experiece, time in bureau, etc...this could have been the lowest rate we offered or it could have been a lower rate and dealer marked up for profit....by the way no business is in business to lose money....Ally is an indirect lender who never sees the customer except through credit bureau and deal structure sent over my dealer...tell me how they discriminate based on that......I have been in the business for 24 years and we aren't allowed to even take a driver's license as that could be perceived as having something that might cause discrimination....this is a huge joke and how funny that in the very near future the minority group will swing a different way.....then what

Mike Hof
March 22, 2013 at 12:01 am

Wait, isn't Ally an arm of GM owned by the .gov? More proof that the .gov has no business owning stakes in private business.

Marsha Suozzi
March 21, 2013 at 10:20 pm

Don't complaint Richard Harter - my interest rate is 21% !!!!!! And my only problem was I was "divorced"........credit rating similar to yours........

Chris
March 21, 2013 at 9:38 pm

I ran my credit report 2 days before I walked into a dealership to purchase a used car, so I felt very prepared. When the F&I guy came back with my credit report my score was quite a bit lower even though it was ran through the same credit reporting agency. He said that your score is different when they're running a report for an auto loan. That made a difference in the interest rate I could get. What is THAT all about? The reporting agencies are in on it too? You can't trust anything!

DC
March 21, 2013 at 8:32 pm

It's not just your credit rating that is considered. For all loans, the debt to income ratio is also a big contributing factor.

youah
March 21, 2013 at 7:52 pm

be careful, they try to cheat on your credit score which is a benchmark for loan interest rates . know your score before even dealing with them

eddie
March 21, 2013 at 7:23 pm

all banks are thieves they hide everything from everyone they are dishonest people like the goverment they hide and tell people stories just to shut them up. next time someone says geta bank loan think of how much your gonna pay and how much the bank makes off of you?? they are bandits like the goverment. its not the people to worry about its the goverment and the banks they are all together they arent nice people like you think they are.very very wrong people banks and goverment

Richard Harter
March 21, 2013 at 7:05 pm

I just bought a new 2012 GMC Sierra TexasEdition PU/truck. Even with a 779 credit rating,Ally said the best interest rate they could offer me was 4.9% apr. I believe I should have gotten a lot better rate than that. Maybe 1.9% at very least.