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US motor finance sector responds to consumer attacks

In a move that responds to recent attacks from consumer bodies on US dealers' F&I practices, the American Financial Services Association has announced that its members will add a new statement to their vehicle financing contracts that tells consumers they may negotiate the APR when they finance a vehicle through a dealership.

Under a new voluntary standard adopted by the AFSA, members will also include a statement in their financing contracts that says dealerships may retain a part of the finance charge. Ford Credit asys it has already instituted the changes.

While the standard is effective immediately, AFSA will allow time for its members to notify independent form producers with whom they do business and/or redesign their own forms and training documents, train employees and take other necessary steps for compliance. The association expects most of its members to have incorporated the new standard within the next six months.

Last year, the AFSA Education Foundation (www.afsaef.org), an affiliate of AFSA, and NADA produced a consumer brochure, Understanding Vehicle Financing, in cooperation with the Federal Trade Commission. The brochure, which covers fundamentals about the dealership financing process, is available in both English and Spanish. But this was not enough to prevent a US Consumer Coalition from attacking dealers for allegedly discriminating against racial minority buyers with higher-than-average retail finance rates.

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