On May 21, President Donald Trump signed into law S.J. Res. 57 – a measure passed by Congress to reject a Washington bureaucracy’s rule which could have eliminated the ability of car dealerships to discount loans for their customers.
“This is a great day for consumers, as Congress and the President have helped to preserve their ability to receive auto loan discounts from local dealerships,” said NADA President and CEO Peter Welch. “NADA congratulates the U.S. House and Senate for their focus and perseverance on this issue, and the President for signing the new law to protect consumers.”
NADA supported this bipartisan effort that began years ago, after the Consumer Financial Protection Bureau (CFPB) issued “guidance” to auto lenders in 2013. Based on a flawed approach and without any opportunity for public comment, the CFPB threatened to make it impossible for local dealerships to discount loans for their customers. House Financial Services Committee Chairman Jeb Hensarling (R-Texas) issued a number of reports detailing the agency’s actions.
Nearly 50,000 new cars and trucks are sold every day, and more than 85% are financed – with the large majority financed at the dealership. Dealerships often discount a rate for a customer – for example, to meet or beat a competing loan offer or meet a customer’s monthly budget constraint.
The CFPB’s guidance could have ended these discounts by pressuring auto lenders to eliminate discountable loans, and that approach would have increased the cost of auto credit for consumers everywhere.
Fortunately, the new law, sponsored by U.S. Sen. Jerry Moran (R-Kan.), U.S. Rep. Lee Zeldin (R-N.Y.), and prompted by U.S. Sen. Pat Toomey (R-Pa.), disapproved the CFPB’s guidance, helping to preserve loan discounts for consumers who need affordable cars and trucks. Read about the history of the CFPB’s campaign to eliminate consumer discounts here.