Subprime auto loans have gotten most of the attention, but an editorial in The New York Times on Saturday makes other demands dealers and lenders are sure to dislike.
For instance, the Times editorial said auto dealers, like mortgage lenders, “must” be made responsible for verifying “that borrowers have the ability to repay their loans and meet their other expenses.”
How far into household budgets would dealerships go? Would customers be willing to share the information? Imagine the additional dealership bureaucracy and paperwork that would create on top of the same functions being performed by lenders. Not to mention the parallel bureaucracy to monitor and enforce it all.
Also, without using the term “dealer reserve,” the editorial called on regulators to ban dealer reserve. At least, dealer reserve is probably what the newspaper had in mind when it said “regulators should bar the dealers from gaining additional profit by manipulating interest rates.”
Manipulating interest rates? That sounds like dealers are trying to rig the market. Auto dealers and lenders have a long, long way to go to sort out the urban myths, half-truths and willful misunderstandings that fuel generalizations and overstatements about them by editorialists and others unschooled in F&I matters.