Auto Financing: Will New Legislation Protect Dealers Over (Minority) Consumers?

As a result of the economic turmoil, causing the meltdown of the economy both domestically and internationally, the House Financial Services Committee passed legislation to create a Consumer Federal Protection Agency.

This agency will be responsible for regulating financial products such as mortgages and credit and debit cards. Ironically, auto loans will be excluded from the mix.

While a number of watch dog groups believe dealers should be regulated, too, as a result of a number of studies over the years indicating predatory finance lending practices against minorities, NADA (the National Auto Dealer Association), a national advocacy organization for new-vehicle dealers have worked tirelessly to keep dealership assisted financing outside of the authority of the Consumer Financial Protection Agency.

It is not clear whether the current bill will pass the House and Senate or if the dealership will continue to be exempt, according to Automotive News. While the bill currently favors the dealers, the Consumer Federation of America like a number of consumer advocacy groups believe consumers receiving financing through car dealer deserved to have the same type of umbrella protection as credit card holders and folks with mortgages.

Until this issue is resolved, consumers should make sure they shop around for financing.