Could Congress end F&I as we know it?

Donna Harris covers retail issues for Automotive News
I just returned from the National Automotive Finance Association conference in Fort Worth, Texas, last week and got an earful about federal legislation that would regulate the dealers' finance and insurance profits.

Most of the buzz was about the proposed consumer financial protection agency. Andy Koblenz, vice president and general counsel for the National Automobile Dealers Association, called this "rule-making on steroids."

The legislation, which has passed the Senate and House and is now being debated in conference committee, would give the new agency broad powers to stop unfair, deceptive and abusive practices. The industry has a pretty good idea what unfair and deceptive acts are, but "abusive" is a vague, new term that may be dangerous for dealers, Koblenz said.

There are plenty of people on Capitol Hill and within the administration who don't see dealer involvement in auto financing as a convenience for the buyer, he said.

Then there's the proposed national usury rate legislation, which caps charges for credit transactions at 36 percent. Before you say that's a rate ceiling you can live with, let me tell you what that 36 percent includes.

It's not just the retail interest rate but finance fees and products such as service contracts that are rolled into that rate. Legal experts at the meeting said that if this legislation passes, dealers can kiss their aftermarket product sales goodbye.

The more I hear about federal legislation, the more I think the F&I office could be just a few votes away from going poof.