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Auto Dealers Uphold Fair Credit and Consumer Competition



2021 NADA Board Member Wes Lutz

Wes Lutz

NADA Board Member - Michigan

Since 2013, the nation’s franchised new-car dealers and industry allies stood side-by-side as we fought the Consumer Financial Protection Bureau (CFPB) to preserve the dealer assisted financing model, and its irrefutable benefit to all car-buying customers. In May, our customers won a major victory when Congress and the President voided the CFPB’s 2013 guidance – a NADA priority for the last five years.

But our work is not done. I want to remind all franchised dealers who have not already done so to review and consider implementing NADA’s voluntary Fair Credit Compliance Policy & Program, which we released in 2014 with the American International Automobile Dealers Association (AIADA) and the National Association of Minority Automobile Dealers (NAMAD). Our program helps dealers to offer competitive rates to our customers while abiding by the nation’s fair credit laws. It’s good for our customers, good for our businesses, and implementing it is the right thing to do.

I cannot stress the benefits of this program enough. It is an effective approach to promote compliance with the federal Equal Credit Opportunity Act (ECOA), while preserving flexibility for dealerships to allow customers to benefit from today’s intensely competitive vehicle financing market. Our NADA program fully adopts – and adds to – the beneficial fair credit risk mitigation model that the Department of Justice developed in 2007 to resolve two fair credit cases involving dealerships.

We have worked to make dealer adoption and implementation of the voluntary NADA/NAMAD/AIADA Fair Credit Compliance Policy & Program as straightforward as possible. To this end, each of the three major credit application aggregators – Dealertrack, RouteOne and CU Direct – as well as several other companies have licensed the use of the program and included it in their automated offerings to dealers.

Time and time again, NADA has shown empirically that policies that attempt to upend our dealer reserve model will harm car buyers because they reduce the competition that brings lower rates for customers. This has been the crux of our argument since the CFPB rolled out its flawed auto finance guidance—a rule that, in essence, threatened to take away our customers’ right to find a better and more competitive deal.

NADA will continue to support our members through the challenges ahead. In the meantime, it’s up to our industry to lead the way when it comes to offering credit fairly to our customers. I’m confident that we’ll continue to prove that dealers provide the most competitive, efficient, consumer benefits in our current auto finance model while abiding by some of our nation’s most important laws and doing right by our customers.

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Lutz is 2018 NADA chairman and president of Extreme Chrysler-Dodge-Jeep-Ram in Jackson, Mich.

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