Automotive News Finance & Insurance Blogs

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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Ally moves closer to independence, cheaper money

Posted 12:01 am U.S. ET, June 25
blogs Jim Henry is a special correspondent for Automotive News.
 
Ally Financial will move one step closer toward independence from government ownership next month when two of its three remaining board members nominated by the U.S. Treasury step down from the board. That will be down from a high of four board members nominated by Treasury out of 11, which effectively amounted to control of Ally Financial. The latest change takes effect with Ally’s annual ...
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Who makes irrational loans? Not Me

Posted 12:01 am U.S. ET, June 18
blogs Jim Henry is a special correspondent for Automotive News.
 
Readers of “The Family Circus” in the funny pages will recognize the naughty, invisible gremlins named Nobody, Not Me and Ida Know. When the parents ask who broke the lamp or who ate the cookies, the kids blame the gremlins. Are the gremlins at it again in auto loans? Maybe they’re to blame for so-called irrational competition, presumably the result of lenders making unprofitabl ...
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U.S. House action on CFPB is symbolic

Posted 12:01 am U.S. ET, June 11
blogs Jim Henry is a special correspondent for Automotive News.
 
The auto finance industry, auto dealers, and their mostly Republican allies in Congress continue to make it clear they don’t like the Consumer Financial Protection Bureau or how it was set up in 2010. They also don’t like the CFPB and the U.S. Department of Justice using the disparate impact theory to try and prove discrimination in auto lending, the legal theory behind a $98 million ...
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Lender consent order grants insight into FTC

Posted 12:01 am U.S. ET, June 4
blogs Jim Henry is a special correspondent for Automotive News.
 
Dealers and their legal counsels should check out last week’s consent order between subprime auto lender Consumer Portfolio Services and the Federal Trade Commission, even though the case isn’t about dealerships. Dealerships aren’t even mentioned in the consent order, and in the FTC complaint in the case, they’re mentioned only in passing as the sources for the bulk of Con ...
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NADA's take on 'The Fallacy of Flats'

Posted 12:01 am U.S. ET, May 28
blogs Jim Henry is a special correspondent for Automotive News.
 
Editor's note: This blog has been amended to clarify NADA's basic position on flat fees and how dealers would be incentivized to choose lenders. The National Automobile Dealers Association has tried for months to impress upon the Consumer Financial Protection Bureau that switching from dealer reserve to flat fees will not eliminate dealerships’ ability to set their compensation for auto loa ...
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Dealer reserve to come under fire in D.C.

Posted 12:01 am U.S. ET, May 21
blogs Jim Henry is a special correspondent for Automotive News.
 
The Center for Responsible Lending and other advocacy groups are hosting a briefing on Capitol Hill Thursday to address what the groups call “auto lending abuses,” the chief one being dealer reserve, also known as dealer markup. The briefing could turn up the emotional heat in the dispute over dealer reserve. Until now the debate has been testy, but mostly academic. The consumer ...
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Chrysler Capital takes toll on Ally

Posted 12:01 am U.S. ET, May 14
blogs Jim Henry is a special correspondent for Automotive News.
 
Santander Consumer USA and Ally Financial Inc. passed each other coming and going in the first quarter in terms of business with Chrysler Group, but don’t expect them to exchange a friendly wave. The preferred lender agreement between Chrysler Group and Ally expired on April 30, 2013, after a four-year run. Chrysler replaced Ally with Chrysler Capital, a program in which Santander Consumer ...
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Dealer reserve is here to stay … right?

Posted 12:01 am U.S. ET, May 7
blogs Jim Henry is a special correspondent for Automotive News.
 
Auto lenders are sticking to dealer reserve despite the Consumer Financial Protection Bureau's crackdown and despite BMO Harris Bank's recent switch to a flat fee. That was the buzz at the Auto Finance Risk/Compliance Summit presented by Royal Media Group in California this week, according to a panel member. The CFPB wants lenders to switch to flat fees or some other form of dealership compensat ...
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Tax refund as down payment? Why not?

Posted 12:01 am U.S. ET, April 30
blogs Jim Henry is a special correspondent for Automotive News.
 
The first quarter is typically the strongest quarter of the year for subprime financing and used-car auto loans due to the timing of tax refunds, say industry experts such as Asbury Automotive COO Michael Kearney, who noted the trend last week. Tax refund season starts early. As of Feb. 14, the IRS had processed 31.3 million refunds, averaging $3,211, the agency said. As of April 18, it had sent ...
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Why Group 1 finds F&I a tougher sell overseas

Posted 12:01 am U.S. ET, April 23
blogs Jim Henry is a special correspondent for Automotive News.
 
Think F&I managers have it tough making a sale in the United States? It’s a lot tougher in the United Kingdom and in Brazil, Group 1 Automotive says. Group 1’s average F&I revenue per vehicle retailed in the United States last year was $1,371. In the United Kingdom, it was $615, and in Brazil, $416. “Americans want their car, they want it today, and they want to drive i ...
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Inquiry into alleged CFPB bias picks up steam

Posted 12:01 am U.S. ET, April 16
blogs Jim Henry is a special correspondent for Automotive News.
 
The issue of whether, ironically, the Consumer Financial Protection Bureau allegedly discriminates against its own employees has got legs. A subcommittee of the House Financial Services Committee heard really scorching -- but totally one-sided -- testimony in a hearing earlier this month from Angela Martin, an attorney who works at the CFPB, accusing the CFPB of a “culture of retaliation an ...
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Misleading sales ads hurt F&I

Posted 12:01 am U.S. ET, April 9
blogs Jim Henry is a special correspondent for Automotive News.
 
State and federal regulators have cracked down this year on misleading dealership advertising. In just about every case, their complaint was that the advertising failed to adequately disclose financial terms or hidden costs. The regulators’ complaints weren’t aimed at the F&I office. But customers don’t necessarily distinguish between a dealership’s marketing and F& ...
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Off-lease surge should spark even more leasing

Posted 12:01 am U.S. ET, April 2
blogs Jim Henry is a special correspondent for Automotive News.
 
Scheduled lease terminations are expected to grow again in 2014, providing a strong tailwind for additional leases this year and higher customer loyalty. Lease customers are more loyal than loan or cash customers to a particular brand or dealership. After all, the dealership has a built-in chance to sell or lease the customer another car when they bring in their off-lease vehicle. In 2013, lease ...
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Ally takes step toward 'free at last' with IPO

Posted 12:01 am U.S. ET, March 27
blogs Jim Henry is a special correspondent for Automotive News.
 
NEW YORK -- It’s been a long time coming, but Ally Financial finally filed for its initial public stock offering today -- another step in a long process toward becoming a truly independent company. Ally CEO Michael Carpenter said in an interview at the NADA convention in New Orleans in January that Ally was working on becoming “free at last” -- that is, free of both government a ...
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CFPB, FTC Web sites differ in tone

Posted 12:01 am U.S. ET, March 26
blogs Jim Henry is a special correspondent for Automotive News.
 
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 Fin ...
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House committee presses CFPB for answers

Posted 12:01 am U.S. ET, March 19
blogs Jim Henry is a special correspondent for Automotive News.
 
The Consumer Financial Protection Bureau has ignored a congressional deadline to specify how it determines discrimination in auto lending. The House Financial Services Committee sent CFPB Director Richard Cordray a sharply worded letter on March 7 requesting in no uncertain terms answers to a list of questions concerning the CFPB’s specific methodology for determining that a disparate impac ...
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Consumer site wants buyers to pay less for vehicles

Posted 10:30 am U.S. ET, March 12
blogs Jim Henry is a special correspondent for Automotive News.
 
The consumer advice Web site Interest.com offers prudent financial guidance to keep car buyers out of debt so they can spend more on other priorities -- such as a retirement nest egg or college for the kids.Lucky for the auto industry, few people seem to be taking that advice."People are committing way too much discretionary income to a car," says Mike Sante, managing editor of Interest.com. Inste ...
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Why the F&I office still matters

Posted 12:01 am U.S. ET, March 5
blogs Jim Henry is a special correspondent for Automotive News.
 
There's good news for the future of the F&I office.A recent McKinsey & Co. study says one of the main reasons consumers still come to a brick-and-mortar dealership instead of buying cars online is to get questions answered about finance and insurance that can't be addressed, or can't be answered "conclusively," online."You can shop for home mortgages online and find out from a lot of sites ...
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The disconnect lingers between auto finance and the CFPB

Posted 12:01 am U.S. ET, Feb. 26
blogs Jim Henry is a special correspondent for Automotive News.
 
The auto finance industry and the Consumer Financial Protection Bureau have a fundamental disconnect.The auto finance industry sees itself as unique while the CFPB sees it as just one more consumer finance sector, essentially not that different from mortgages, credit cards or student loans.Last year, after issuing a bulletin equating dealership compensation based on dealer reserve with discriminat ...
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Auto loans just keep growing

Posted 12:01 am U.S. ET, Feb. 19
blogs Jim Henry is a special correspondent for Automotive News.
 
Auto loans had another double-digit growth spurt in the fourth quarter, Experian Automotive reports.Total auto loan balances outstanding reached $798.5 billion in the quarter, an increase of 11 percent from the 2012 period and the highest total since Experian started publishing its numbers in 2007. The third-quarter total of $782.9 billion had also been a high, up 15 percent from the same 2012 per ...
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No need to panic as big banks pare dealers

Posted 12:01 am U.S. ET, Feb. 12
blogs Jim Henry is a special correspondent for Automotive News.
 
Recent news that Chase Auto Finance and TD Auto Finance are looking to trim their dealership networks brought swift reactions of "Here we go again" from some members of the dealership F&I community.That more or less automatic response is based in part on the stereotype that banks move in and out of auto finance when it suits them.But it's a gross exaggeration to associate what the banks are do ...
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Long loans are a necessary evil, dealers say

Posted 12:01 am U.S. ET, Feb. 5
blogs Jim Henry is a special correspondent for Automotive News.
 
Everyone agrees that superlong loan terms are bad for the industry, but it seems no one wants to give them up first.Long loans -- between, say, 72 and 84 months or even longer -- likely will leave customers upside down at trade-in time, owing more on their car than it's worth. Brand loyalty and dealership loyalty fall off at the end of an extremely long loan term, experts say."Long-term financing ...
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Fewer bosses, Disney savvy, $2 idea lift stores

Fewer bosses, Disney savvy, $2 idea lift stores

A Chrysler Group dealership chain is stripping away layers of management to sell cars faster. A Chevrolet-Cadillac store is enchanting customers through Disney training. Mon., July 21
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