Automotive News Finance & Insurance Blogs

Free advice for consumers can be worth the price

Posted 12:01 am U.S. ET, Nov. 19
blogs Jim Henry is a special correspondent for Automotive News.
 
There’s a bright spot for dealerships that do a lot of business with automakers’ captive finance companies and preferred lenders, data on the website Wallet Hub show: Car manufacturers (that is, captives) charge the lowest auto loan rates for new cars, at 40 percent below average. Credit unions follow, at 24 percent below average. National banks charge rates that are close to average, ...
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Popping the subprime bubble myth

Posted 12:01 am U.S. ET, Nov. 19
blogs Arlena Sawyers covers remarketing for Automotive News.
 
There is no subprime auto loan bubble, darn it. That message came through loud and clear at session after session devoted to subprime lending during the Used Car Week conference sponsored by Auto Remarketing magazine last week in Las Vegas. The recurrent theme was sparked by recent media stories -- presumably those by The New York Times -- that claim there is a troubling trend of consumers with ...
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‘Disparate impact’ opposition sees hope

Posted 12:01 am U.S. ET, Nov. 12
blogs Jim Henry is a special correspondent for Automotive News.
 
Hope remains among opposers of the “disparate impact” theory that the U.S. Supreme Court could ultimately rule against the theory in court, maybe in 2015. Law firm Ballard Spahr even described the disparate impact theory as “on the ropes” in a online article not long ago because a federal district court recently ruled against the theory in a case involving the U.S. Departm ...
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SEC joins pile of regulators probing subprime loan securitization

Posted 12:01 am U.S. ET, Nov. 5
blogs Jim Henry is a special correspondent for Automotive News.
 
It appears that when it comes to investigating the securitization of subprime auto loans, the bigger the mountain of regulators, the better. The latest agency to pile on is the Securities and Exchange Commission, which is launching probes on top of parallel investigations by the U.S. Department of Justice and some state attorneys general. Last week, GM Financial and Ally Financial disclosed in s ...
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Looking for a new F&I product? Mull this

Posted 12:01 am U.S. ET, Nov. 5
blogs Larry P. Vellequette covers Chrysler for Automotive News.
 
Consider this a free idea -- the kind that hopefully somebody out there takes and develops and uses to make a lot of money. Dealers need to offer new-vehicle customers a kind of “CarFax” protection plan that spares them from the inevitable dings to vehicle equity that are now commonplace in an age of nearly unlimited information. Here’s how it should work: “John” i ...
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The story behind that list of dealership slang

Posted 12:01 am U.S. ET, Oct. 29
blogs Jim Henry is a special correspondent for Automotive News.
 
F&I managers -- mostly appalled, but at least partly amused -- recently passed around online a link to a “Car Dealer Dictionary” of dealership slang, including terms that are supposedly in use in F&I departments. Some entries are harmless, such as “Up” for “potential customer.” Some of the terms are familiar in auto industry circles, such as the notori ...
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Why loan length doesn’t matter

Posted 12:01 am U.S. ET, Oct. 22
blogs News Editor James B. Treece oversees Automotive News' coverage of auto retailing.
 
Here’s another reason not to fret over longer loans: Their numbers are misleading. Consider these comments from Dave Mondragon, executive director of U.S. sales for Ford and Lincoln at Ford Motor Co. Speaking at Automotive News’ Best Dealerships To Work For event last week in Chicago, Mondragon noted that the most recent data show that 60 percent of all vehicle finance contracts are ...
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Visions of a paper-free auto finance world

Posted 12:01 am U.S. ET, Oct. 15
blogs Jim Henry is a special correspondent for Automotive News.
 
What will auto finance look like in 2020? Chase Auto Finance exec Bill Jensen did some speculating last week at the Auto Finance Summit in Las Vegas. One idea he proffered was that by 2020, auto loans would be “completely paperless” -- something the auto finance industry has tried but failed to do for a couple of decades. Not only will loans be paperless, Jensen said, customers will ...
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Subprime is no runaway train

Posted 12:01 am U.S. ET, Oct. 8
blogs Jim Henry is a special correspondent for Automotive News.
 
There it goes again, as Ronald Reagan might have said. The New York Times is still hammering a theme that subprime auto loans will endanger the U.S. economy in the way that subprime mortgages helped bring about the Great Recession. In an article last week -- the latest of several on subprime auto loans -- the paper said “some of the same dynamics” that led to the subprime mortgage cr ...
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Lenders must look through consumers' eyes

Posted 12:01 am U.S. ET, Oct. 1
blogs Jim Henry is a special correspondent for Automotive News.
 
In the second of what’s shaping up to be a series of attacks on subprime auto finance -- the first was in July -- The New York Times last week made a breathless page one story out of a years-old device: the vehicle starter interrupt. Starter-interrupt devices enable auto lenders to remotely disable a vehicle’s ignition if a subprime borrower misses a payment. The devices have been aro ...
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Auto finance industry still paying for past sins

Posted 12:01 am U.S. ET, Sept. 24
blogs Jim Henry is a special correspondent for Automotive News.
 
Consumer Financial Protection Bureau regulators seem to have a caricature of a plaid, polyester sport coat-wearing car salesman in mind when they talk about auto retailing. (Picture the salesman in the movie Fargo who won’t take no for an answer from an angry customer who refuses to buy “Tru-Coat sealant.”) CFPB Director Richard Cordray, in opening remarks at a hearing last week ...
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The case for casting a wider net with credit apps

Posted 12:01 am U.S. ET, Sept. 17
blogs Jim Henry is a special correspondent for Automotive News.
 
Auto lenders complain they hate it when dealership F&I managers send them credit applications outside their preferred range of credit scores. Yet Greg Goebel, CEO of DealerStrong, a dealership training and consulting firm, advised finance managers to do just that at last week’s Industry Summit in Las Vegas. According to an analysis Goebel did with a database of some 200,000 transactions ...
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F&I wait times have virtual repercussions

Posted 11:00 am U.S. ET, Sept. 10
blogs Jim Henry is a special correspondent for Automotive News.
 
LAS VEGAS -- Dealerships know that customer satisfaction suffers if car buyers spend time sitting outside the F&I office. But there’s another reason why dealerships should slash F&I wait times: 63 percent of customers who use their mobile devices at dealerships use them to shop online for other vehicles and better deals at other dealerships. That’s according to Steve Braskamp ...
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Regulation forecast calls for rain, former CFPB exec says

Posted 11:00 am U.S. ET, Sept. 10
blogs Jim Henry is a special correspondent for Automotive News.
 
LAS VEGAS -- Rick Hackett, a former assistant director for the Consumer Financial Protection Bureau who was the bureau’s liaison to the auto finance industry, predicted the bureau would probably unveil a long-awaited rule next week, defining which nonbanks fall under the CFPB’s jurisdiction. “Supervision is coming, and soon,” Hackett said Tuesday at the Industry Summit her ...
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New rules for asset-backed securities could impact subprime lenders

Posted 12:01 am U.S. ET, Sept. 3
blogs Jim Henry is a special correspondent for Automotive News.
 
The Securities and Exchange Commission last week laid out new rules for asset-backed securities, the financial practice in which lenders bundle loans and sell them off to investors to raise money to fund new loans. The new SEC rules are primarily aimed at mortgages, but asset-backed securities backed by auto loans are also covered. The commission introduced some new rules for credit rating agenci ...
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Is CFPB guilty of spin?

Posted 12:01 am U.S. ET, Aug. 27
blogs Jim Henry is a special correspondent for Automotive News.
 
Remarks delivered by Consumer Financial Protection Bureau Director Richard Cordray and language used in a bureau statement last week were a lot harsher than the dry legalese of the consent order signed this month by the CFPB and First Investors Financial Services Group Inc. Bennie Duck, CFO of First Investors Financial Services Group, signed the consent order Aug. 7; Cordray’s signature is ...
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Did dealers hurt themselves with the carve out?

Posted 12:01 am U.S. ET, Aug. 20
blogs Jim Henry is a special correspondent for Automotive News.
 
There’s no mistaking that federal regulators are serious about policing auto lenders. The Justice Department’s recent subpoenas to Santander Consumer USA and GM Financial are just the latest blow, preceded by actions against other auto lenders by the Consumer Financial Protection Bureau and Federal Trade Commission. By extension, auto dealers feel they’ve got a big target on the ...
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Skipping wheel-and-tire was big mistake

Posted 12:01 am U.S. ET, Aug. 20
blogs Jamie LaReau covers the automotive retail beat for Automotive News.
 
Wheel-and-tire insurance is a valuable product. There, I admit it. It’s not the “snake oil” that a cynical friend once espoused it and other F&I products to be. The friend believes the products are big money-makers for the dealership but costly and useless to the consumer. The dealer’s profit margins are indeed fat. One F&I manager told me if the dealership pays $ ...
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N.Y. Times' demands are misguided

Posted 12:01 am U.S. ET, Aug. 13
blogs Jim Henry is a special correspondent for Automotive News.
 
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 ...
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GM Financial subpoena shifts investigation away from dealers

Posted 12:01 am U.S. ET, Aug. 6
blogs News Editor James B. Treece oversees Automotive News' coverage of auto retailing.
 
When dealers saw headlines saying the U.S. Department of Justice had subpoenaed General Motors Financial Co. last month to produce documents relating to its subprime auto loan contracts, they could be excused for worrying that this represented another threat to their arranging car loans for consumers. It appears there’s nothing to worry about on that front, at least not for now. As reporte ...
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Calif. ballot proposal misses cut for November vote

Posted 12:01 am U.S. ET, July 30
blogs Jim Henry is a special correspondent for Automotive News.
 
A California consumer advocacy group’s ballot initiative that would have outlawed dealer reserve in the state -- part of a wider backlash against dealer reserve as a “hidden extra charge” -- won’t make it on the November ballot this year. “We decided to hold off,” Rosemary Shahan, president of Consumers for Auto Reliability and Safety in Sacramento, Calif., sai ...
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N.Y. Times story on subprime offers feds ammunition

Posted 12:01 am U.S. ET, July 23
blogs Jim Henry is a special correspondent for Automotive News.
 
A withering account of subprime auto lending in Sunday’s New York Times reinforces bad stereotypes about used-car dealers, smears subprime lenders and their investors, takes out of context an increase in delinquencies and loan losses from record lows, and provides ammunition to auto finance industry critics in Washington. It also blurs the differences between subprime mortgages, which contr ...
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Credit union ads highlight misperceptions of dealer reserve

Posted 12:01 am U.S. ET, July 16
blogs Jim Henry is a special correspondent for Automotive News.
 
A Florida credit union’s ad campaign beating up dealers and auto lenders for “rate markups” is hard to look at, but dealers and lenders should check it out to see what they’re up against in terms of public perception and in case the approach catches on in other states. The Space Coast Credit Union ads treat dealer reserve -- the small amount of interest lenders allow deale ...
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Why buy-here, pay-here is losing some turf

Posted 12:01 am U.S. ET, July 9
blogs Jim Henry is a special correspondent for Automotive News.
 
Even though broccoli is better for them, lots of people won’t eat it when they can have ice cream instead. The scenario is playing out more often these days in the auto finance world, too. That’s according to top executives of America’s Car-Mart, the giant buy-here, pay-here used-car retailer based in Bentonville, Ark., as more consumers pass on the broccoli -- offers from buy- ...
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Don't do much leasing? Better bone up

Posted 12:01 am U.S. ET, July 2
blogs Jim Henry is a special correspondent for Automotive News.
 
Leasing’s not just for luxury brands anymore. It’s spreading to mass-market brands too, experts say. That means F&I managers who are inexperienced or just rusty at leasing paperwork had better prepare for more customer demand for leases. That includes cobbling a menu of lease-friendly F&I products such as excess wear-and-tear protection or tire-and-wheel coverage. Leasing alr ...
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