CFPB Publishes Auto Loan Debt Blog Post | Troutman pepper

On February 24, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a blog post, outlining several auto loan topics in the wake of rising vehicle prices. According to Bureau of Labor Statistics datathe consumer price index has increased by 40% for used cars and trucks and 12% for new cars since January 2021. Due to these increases, the CFPB expects the total amount debt and average loan size continue to rise.

The blog post describes three main ways in which the CFPB seeks to ensure a fair, transparent and competitive auto credit market in the wake of significant price changes:

  • Ensure affordable credit for car loans;
  • Monitoring auto loan servicing and collection practices; and
  • Encourage competition among subprime lenders.

Concretely, the CFPB:

  • Plans to monitor loan structures and consumer outcomes, especially those where lenders rely on high interest rates and fees – even in the event of consumer default;
  • fears that loan-to-value ratios will start to rise as they did before the global vehicle shortage;
  • Wants repairers to make housing available to all consumers;
  • Intends to work with other federal agencies to ensure appropriate treatment of service members;
  • is concerned that the use of technologies, such as GPS tracking devices and license plate recognition technology, may have a disproportionate impact on certain communities and also lead to privacy issues; and
  • Desires to understand potential barriers to entry into the subprime mortgage market and seeks to work with the Federal Trade Commission and Federal Reserve Board of Governors to resolve market issues.

The CFPB blog reminds us that car financing is still very much on the Bureau’s radar. It also outlines the types of items the CFPB will be looking at in auto financing under the leadership of Director Rohit Chopra.

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