Category: F&I

Are You Taking Advantage of the Domino Effect?

Post author By efgmarketing
Post date September 30, 2015

Contributing Author: Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies

In December 2013, the Consumer Financial Protection Bureau (CFPB) ordered Ally Financial to pay $80 million in civil penalties over Ally’s allowance of dealer markup, representing the federal government’s largest auto loan discrimination settlement in U.S. history.

Throughout 2014, the auto finance industry was on the edge of its seat to see who would be next. Rumors flooded the industry of CFPB investigations, but no news came out about another settlement. Meanwhile Chrysler Capital, Santander Consumer USA proactively took action and lowered their cap on dealer participation in October 2014.

We then waited another eight months before another lender felt the sting of the CFPB. In June 2015, BB&T announced the launch of flat fees as the CFPB announced the expansion of oversight to larger non-bank auto finance companies.

Tags Ally Financial, American Honda Finance Corporation, BB&T, CFPB, Chrysler Capital, EFG Companies, Fifth Third Bank, Honda, Santander Consumer USA, SCUSA

F&I

Are You Appealing to Millennials?

Post author By efgmarketing
Post date August 20, 2015

Contributing Author: Steve Klees, Senior Vice President, Specialty Channels, EFG Companies

When you hear the term “Millennials” paired with the term “car,” what comes to mind? Do you automatically think, “Millennials aren’t interested in cars?” For the past few years, it seemed like a new article was published every month stating that the reason Millennials weren’t buying cars was due to personal preference.

Today, economics has proven that assertion false. According to J.D. Power & Associates, Millennials (those born between 1980 and 2004) accounted for 27 percent of new car sales in the U.S. last year. Millennials have already surpassed Generation X to become the second-largest group of new car buyers after Baby Boomers; and each year, the influence of the Baby Boomer generation recedes and Millennial buying power increases.

It turns out, personal preference had very little to do with Millennials approaching the auto industry. Rather, it had all to do with the economy, the job market, and wage growth. Most of the Millennials with buying power today entered the job market during the economic upheaval in the Great Recession. Because of the lack of prospects, some returned to school, while others moved in with parents or got roommates and stuck it out in low-paying or part-time jobs that did not utilize their post-high school training or education.

Tags Baby Boomers, Boomers, EFG Companies, Gen X, Gen Y, Generation X, Generation Y, Millennials, subprime, subprime auto finance, subprime auto loans, vehicle return, vehicle service contract, vsc

Compliance F&I

The Supreme Court Upholds Disparate Impact. Now What?

Post author By efgmarketing
Post date August 4, 2015

Contributed Author: Karen Klees, Certified Consumer Credit Compliance Professional, EFG Companies

June was a big month for the Consumer Financial Protection Bureau (CFPB). The Supreme Court of the United States held in the case of Texas Department of Housing and Community Affairs et al. v. Inclusive Communities Project, Inc., that “disparate-impact claims are recognizable under the Fair Housing Act.” The CFPB established their Larger Participant Rule, putting captive finance companies under their jurisdiction. And, BB&T announced the launch of a nondiscretionary dealer compensation program that prohibits dealer markup and offers a flat-fee dealer compensation program.

Right now, you can’t read the news without seeing an article about the CFPB and speculation on what the industry will look like in the coming months. Rumors abound that three captives currently under CFPB investigation, Honda, Nissan and Toyota, will cap dealer markup.

Just recently, Honda Finance Corporation reached a resolution with the CFPB and the Department of Justice, where it agreed to change its pricing and compensation system to “substantially reduce dealer discretion and minimize the risks of discrimination,” and to pay $24 million in restitution to affected minority borrowers. While the jury is still out on Nissan and Toyota, lenders have a unique opportunity to take advantage of all this activity.

Tags BB&T, CFPB, Consumer Financial Protection Bureau, Department of Justice, Disparate Impact, DOJ, EFG, EFG Companies, Honda Finance Corporation, Karen Klees, Larger Participant Rule, Nissan, Toyota