| The U.S. financial system has been revised and | | | | business. |
| financing options at car dealerships are now | | | | Dealers argued that they are only intermediaries |
| promising to be more competitive. The revising | | | | for financial institutions, which are the ultimate |
| efforts are appreciated by the National | | | | processor and service provider for the loans. The |
| Automobile Dealers Association which is pleased | | | | debate over the exemption of auto dealers from |
| that the regulatory structure is preserved but | | | | the new consumer financial rules has been going |
| consumers are protected under the new laws for | | | | on for a few months but has now come to a |
| dealer-assisted financing. Auto credit is still | | | | resolution. |
| affordable in an extremely competitive auto | | | | Dealers consider that they were already |
| finance marketplace. There has been a debate | | | | well-regulated at each state level and there was |
| around the idea that dealers did not wish to be | | | | no need for supplementary regulations. Such extra |
| regulated by an additional organization. They | | | | regulations would translate into additional costs |
| considered that they are just intermediaries | | | | that would ultimately be passed on to consumers. |
| between their clients and the institutes that offer | | | | Auto dealers that work in rural towns were afraid |
| money for buying cars. As such, extra regulations | | | | that such supplementary regulations could be a |
| would only imply additional costs for the | | | | direct hit to their business. |
| consumers. | | | | On the other hand, car dealers should be subject |
| Dealers can arrange financing that meets bank or | | | | to the same regulations as other workers who |
| credit union terms, while clients can still rely on | | | | help with writing loans. They should play by the |
| their own banking relationships. There are no | | | | same rules as their competitors, in communities all |
| unnecessary regulations for small business dealers, | | | | across the country. Banks and credit unions that |
| and their role is still to facilitate financing under the | | | | make car loans will be regulated by the new |
| new laws. | | | | bureau, so unfair or deceptive practices will be |
| However, there is a new Bureau of Consumer | | | | less likely. |
| Financial Protection, which has direct federal | | | | Auto loan industry is a bigger industry than credit |
| oversight on all auto loans. This new institution will | | | | card industry. Almost 80% of car loans are made |
| probably become operational in 2011. Its existence | | | | through dealerships. Thus, dealers can charge for |
| will ensure that no deceptive practices will be | | | | expensive add-ons, such as extended warranties |
| involved in any types of loans. Auto dealers asked | | | | which consumers might not be well aware of. |
| the Congress to be exempted from the new | | | | Customers could also be offered a more |
| Bureau as they help buyers get loans but they | | | | expensive car that may seem manageable if they |
| are not the banks making the loans. Dealers have | | | | opt for longer loan periods. Clients might become |
| been victims of the credit crisis just as much as | | | | more focused on an affordable monthly cost |
| consumers so there was concern that an | | | | instead of the total cost of the car acquisition. |
| additional structure could adversely affect their | | | | |