Although many Americans rely on their local bank or credit union for a car loan, some get financing through nonbank auto finance companies, including car dealers.
The Consumer Financial Protection Bureau has moved to bring these nonbank lenders under its oversight to make sure car buyers are getting a fair shake on their financing. CFPB currently supervises auto financing at the largest banks and credit unions. A newly published rule will allow it to expand its oversight to include larger nonbank auto finance companies, specifically those that make, acquire or refinance 10,000 or more loans or leases a year.
“Auto loans and leases are among the most significant and complex financial transactions in a typical consumer’s life,” said CFPB director Richard Cordray. “Today’s rule will help ensure that larger auto finance companies treat consumers fairly.”
Americans have about $900 billion in outstanding auto loans. In fact, car loans are the third largest category of debt for Americans, after student loans and mortgages.
The CFPB wants to ensure that nonbank financiers are complying with federal consumer financial laws. The new rule will give the CFPB the authority to supervise about 34 nonbank auto finance companies, which originate about 90 percent of nonbank car loans and leases and serve about 6.8 million consumers.
If you’re in the market to purchase a car, and want to make sure you’re not overpaying on financing, check out “How to Get the Best Deal on a Car Loan” and “Navigating a Car Loan Refinance for Long-Haul Savings.
What do you think of the CFPB expanding its auto financing oversight to include nonbank loans? Share your comments below.