While the Federal Trade commission and Consumer Financial Protection Bureau share a commitment to ensure consumers get a fair shake on auto finance, they gather and impart consumer information differently.
The FTC develops many of the auto finance tips on its Web site in cooperation with the American Financial Services Association and the National Automobile Dealers Association.
The Consumer Financial Protection Bureau doesn’t. It says it develops its own materials for the “Ask CFPB” feature on its Web site, consumerfinance.gov.
The net result is a more neutral tone on the FTC site, ftc.gov., and a tougher tone on the CFPB site. It’s not just a symbolic difference. The CFPB conspicuously solicits consumer complaints on its site, forwards them to the lenders concerned and tracks whether the complaints get settled. The CFPB says it also considers consumer complaints as input toward future regulation.
The CFPB’s tougher tone is evident when comparing the way the FTC and CFPB describe dealership auto financing on their Web sites.
Both agencies advise consumers to negotiate the best possible rate. But the FTC site offers this explanation under the heading Dealership Financing:
“The APR [annual percentage rate] that you negotiate with the dealer usually is higher than the wholesale rate because it includes an amount that compensates the dealer for handling the financing. Negotiation can take place before or after the dealership accepts and processes your credit application. Try to negotiate the lowest APR with the dealer, just as you would negotiate the best price for the vehicle.”
By contrast, the CFPB site, under the question “What is the buy rate?” suggests dealers try to charge customers a higher rate than they’re entitled to.
The Web site explains:
“A buy rate is the interest rate that a lender quotes to your dealer when you seek a loan directly through the dealer. Your dealer may offer you a rate that is higher than the buy rate. The rate the dealer offers you is called the ‘contract rate.’ Sometimes the lender pays the dealer a fee that is based on the difference between these two rates, which can give the dealer an incentive to charge you a higher interest rate than you qualify for.
“TIP: Ask the dealer what the buy rate is and offer to pay the buy rate plus a flat fee, rather than paying an interest rate that is above the buy rate. This could save you thousands of dollars over the life of the loan.”
Immediately following is the legend “Get Help,” with a link for consumers to submit a complaint.
The FTC also solicits consumer complaints on its Web site so it can “detect patterns of fraud and abuse which may lead to investigations and eliminate unfair business practices.” But the invitation to submit a complaint is less conspicuous and not placed immediately under the consumer advice.
By the way, the CFPB is determined that no company should miss a consumer complaint. If the CFPB receives a complaint that’s outside its bailiwick, it forwards it to the federal agency that can handle it.