A flip through online advertising confirms that some dealerships still can't resist energetic come-ons inviting consumers to put their tax refund down on a car. That could be OK for consumers who can truly afford it.
But if tax-refund time is the only time all year a car shopper can afford to make a down payment, in the long run dealers and lenders who overdo it could be calling down lightning from the Consumer Financial Protection Bureau.
The trouble could come as an extension of a CFPB crackdown on so-called refund anticipation loans. An RAL is a short-term, interest-bearing loan made to consumers anticipating a tax refund. The idea is that some people can't afford to wait for their refund checks. But refunds have gotten a lot faster, especially for electronic filers.
The CFPB is putting a spotlight on RALs, payday loans and car-title loans. So dropping RALs could be a way to avoid possible regulation.
At least one big practitioner in the RAL business has dropped out. Tax preparer H&R Block ended the loans for this year's tax season, although it offers "refund anticipation checks" instead. The company cited faster refunds due to electronic filing as a reason for dropping RALs.
Most franchised new-car dealers are probably smart enough not to advertise deals based on these types of loans.
But for those who haven't gotten the message, or use tax-refund come-ons at their buy-here, pay-here operations, be aware. The CFPB may try to put you under the microscope.
Dealers who target consumers anticipating tax refunds may get more than they bargained for.