Congress, President Act to Protect Auto Loan Discounts for Consumers - Greater Cincinnati Automobile Dealers Association

Congress, President Act to Protect Auto Loan Discounts for Consumers

Dear Fellow Dealer:

I’m pleased to bring you some particularly good news for your business and your customers. Earlier today at the White House, President Trump signed into law S.J.Res. 57, a joint resolution disapproving the Consumer Financial Protection Bureau’s (CFPB) 2013 auto lending guidance. As you are aware, this flawed guidance attempted to pressure lenders to eliminate a dealer’s ability to discount loans, which would have been bad for our businesses, and worse for our customers!

In 2013 when the CFPB’s guidance was first issued, it was abundantly clear that the agency was trying to limit the discounts on auto loans that you can offer your customers, such as meeting a customer’s competing loan offer or monthly budget amount. In fact, many industry “experts” said that dealer reserve largely would be eliminated within six months. But NADA and dealers across the country didn’t throw in the towel – we fought back with facts and data.

Congress stepped in soon after the guidance was issued, because Congress has precluded the CFPB from regulating auto dealers. Also, the guidance was issued behind closed doors, without any public feedback at all. Extensive congressional oversight revealed the many problems with the CFPB’s approach. Independent analysis showed that the bureau’s methods were off by as much as 41 percent. Even worse, the CFPB never studied how the guidance might reduce competition, raise the cost of auto credit, or harm car and truck buyers.

Although it took five years, we never gave up. As a direct result of NADA’s sustained efforts, dealer reserve is still intact today. While dealers still need to maintain compliance with fair lending laws, the CFPB’s guidance that threatened to disrupt the auto finance market for dealers and our customers has been eliminated. In fact, with S.J.Res. 57 now the law of the land, the CFPB’s guidance is nullified as if it never existed, and the bureau is barred from issuing new guidance that is “substantially the same.”

President Kennedy once said, “Victory has a thousand fathers, but defeat is an orphan.” Our success truly does have a thousand parents, as countless dealers across the nation urged Members of Congress to help preserve a consumer’s ability to receive a discounted auto loan from a dealer. While NADA led this effort, our victory shows the value of vigilant, organized and informed dealers. Thank you for the essential role that you played in this effort. When dealers come together in Washington, not only do dealers win, but so do our 1.1 million employees and the tens of millions of customers we proudly serve.

Our voices were heard, and Washington actually worked for a once. The pro-consumer, pro-small business position prevailed!


Wes Lutz
NADA Chairman