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‘We’ll go to the mat’ on 3rd-party financing

Don Chalmers used to wrestle.

So he’s used to going to the mat, he says.

And he’s prepared to do just that to protect dealers’ finance and insurance business.

Chalmers, a General Motors and Ford dealer from Rio Rancho, N.M., is the National Automobile Dealers Association industry relations committee chairman.

At the NADA convention last week, Chalmers outlined what he sees as an important issue: the Consumer Financial Protection Bureau’s potential “attack” on dealers’ third-party financing model.

“They would love to change the third-party financing model and take F&I away from us,” Chalmers told a breakfast meeting of Utah, Colorado and New Mexico dealers.

The CFPB was created as part of the 2010 Dodd-Frank financial reform legislation. Since then, the bureau has given auto lenders a lot to worry about. While most dealerships are exempt from the CFPB’s oversight, the agency does have jurisdiction over buy-here, pay-here dealerships and auto lenders.

Any requirements or restrictions placed on lenders -- such as reporting requirements or potential limits on what the CFPB could consider “abusive” lending practices -- are likely to affect dealerships, too. Or its pursuit of lenders could impact how much finance reserve a dealer could earn, some dealers say. The bureau has said it would not go after F&I products such as extended-service contracts or GAP policies.

Chalmers worries the CFPB won’t back down from auto lenders, but he promises neither will he in terms of protecting dealers’ interests. NADA is prepared to prove that third-party financing at dealerships benefits customers and banks and is a key profit center for most dealerships, he said.

If dealerships were to lose the ability to arrange customer financing for vehicle loans, Chalmers said it would “devastate” dealers’ business models.

“We know we do it efficiently,” Chalmers said. “That’s our story and we’re sticking to it. As a former wrestler, I’ll say we’ll go to the mat on this issue.”

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