The following editorial is reprinted from the March 4 issue of Automotive News.
Most dealerships are excluded from oversight by the Consumer Financial Protection Board. But some dealers have fretted that CFPB regulators would find a back door into the finance and insurance office through lenders, which are regulated by the CFPB. Critics said those dealers were paranoid.
But now the CFPB is investigating whether some types of buyers are routinely treated unfairly when dealerships arrange loans for customers and mark up the loan rate by a couple of percentage points, which the dealerships keep as a fee. It seems likely that the CFPB will get lenders to reduce the allowable finance reserve further or move to a flat fee, which many lenders have done. Such a change affects dealership profits.
It isn't paranoia to fear something that happens.