Getting a car loan doesn't have to be a nightmare, even with bad credit.

News from the Consumer Financial Protection Bureau Auto Finance Forum

last updated January 24, 2014 by

Automobiles are part of the American way of life.  Whether you use your automobile for recreation or for work, it is nearly impossible to get around the United States without one.  Unfortunately, millions of Americans are de facto denied the ability to get an automobile because of lending practices that have become pervasive in the industry over the last several years.  A focus on demographics and credit scores has created a strict lending climate that adds to the disadvantages that lower income Americans are already facing.  If you have bad credit, you have probably noticed this discrimination on the part of auto lenders.  The Consumer Financial Protection Bureau understands that this can be an issue, and they are working to fix the issue through federal regulation.

Racial Discrimination in Auto Lending

What the consumer financial protection bureau noticed in 2013 was that many lenders were charging higher interest rates to clients that came from ethnic minorities.  While lenders have a great deal of flexibility in the way that they want to structure their loans, they are prohibited from factoring in protected classes (ethnicity being among them) for loan decisions.  Demographics cannot be used to determine someone’s creditworthiness, and the CFPB believes that millions of dollars in unnecessary harm were being done to low-income communities every year because of this institutionalized racism.

Federal Guidance

After the financial crisis, the federal government created a series of requirements that lenders had to follow when they were lending to hard-hit communities.  Basically, these guidelines showed how auto loans were expected to comply with the federal fair lending law.  According to the letter of the law, the federal government does not have authority over individual car dealerships and their in-house financing programs, but they do have authority over most of the large lenders that make up the backbone of the industry.  The vast majority of dealerships contract out their lending to major loan companies that consolidate the loans into packages for investors, so the federal government actually has a pretty extensive oversight of lending.

Complete Auto Loans Fair Lending

Complete Auto Loans is “color blind” when it comes to issuing loans to consumers.  By complying with the federal loan standards, CAL ensures that every borrower is treated fairly and only the most vital economic information is used to justify loan interest.  We base our interest rates on fair assessments of loan risk, and we do not treat any particular community differently than another when it comes time for auto loan qualifications.

Everyone deserves access to credit, and this includes auto loans.  Even people with bad credit must purchase cars, as automobiles are practically mandatory for achieving a successful and high paying job.  Complete Auto Loans fully supports the efforts of the federal government to ensure that auto lenders end their discriminatory practices and open up the credit market to fair competition.