NYC aims to remove dealers as middlemen on used-car loans, from Automotive News.
The City of New York is campaigning to remove dealer reserve from used-vehicle financing. And it’s enlisting lenders’ help to do it.
Last month, the New York City Department of Consumer Affairs asked lenders to join a marketing and consumer education program aimed at urging used-car buyers to procure their auto loans directly from a lender instead of opting for dealership-arranged financing, including when buying a used car from a new-car dealer.
Lenders who join the program would agree to certain conditions, including an agreement that “there must be no compensation for the secondhand auto dealer for referrals” to the lender. Lenders would also agree to “affordability features,” including limits on customers’ debt-to-income ratio and payment-to-income ratio. In return, the department will market the program to consumers as well as promote it through city agencies and community organizations, which could help “partnering financial institutions broaden their customer base.”