Trade group to recommend changes to how U.S. car dealers extend loans, according to The Wall Street Journal.
A regulatory crackdown on potential discrimination in the $845 billion auto-lending market is prompting a key trade group to recommend changes to how U.S. car dealers extend loans.
The National Automobile Dealers Association is expected to issue guidelines Friday recommending each dealer set a standard interest-rate charge to borrowers, which could only be modified for specific reasons like a competing offer from another lender or dealer. Under this system, dealers would have less authority to determine such charges, which are compensation for setting up the loan.
The recommendations come amid investigations by the Consumer Financial Protection Bureau and Department of Justice into whether auto dealers are raising the cost of lending to minorities through extra interest rate charges. It remains unclear whether the changes, if adopted by auto dealers, will satisfy the government’s concerns or limit the practices regulators say discriminate against minority borrowers.