SITUATION:
Consumer Financial Protection Bureau, which overseas buy here pay here dealers, might be targeting finance and insurance products such as extended-service contacts and other add-ons
Important to know about dealer reserve is profit dealerships make by adding to customer's interest rate on loans negotiated at dealership
Public dealer groups not worried that bureau is targeting dealer reserve since groups had shifted focus from profits on dealer reserve to making profits on F&I products
AutoNation said it gets about two-thirds of its F&I revenue from sale of F&I products and about a third from dealer reserve
SIGNIFICANCE:
Bureau said it believes that letting dealers set final interest rate for customers creates potential for discrimination against legally protected groups such as minorities.
Industry associations deny dealers or lenders tolerate discrimination
Bureau lacks jurisdiction over dealerships except for BHPH, but bureau said in connection with dealer reserve that it would hold lenders responsible for dealership actions
That approach also could apply to aftermarket products, routinely financed in same retail installment contract as loan
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