Boston, MA 09/17/2014 (wallstreetpr) – The consumer-finance regulators in the U.S. have geared up for the detailed reviews of approximately 40 auto lenders. This drive will be taken up so that the federal regulators can find out whether auto lenders abide by the consumer-protection laws or not. The auto-finance departments of some of the leading companies will come under scrutiny, in the first of its kind instance. These leading companies include Ford Motor Company (NYSE:F), Honda Motor Co Ltd (ADR) (NYSE:HMC), Toyota Motor Corp (ADR) (NYSE:TM) as well as Nissan Motor Co Ltd (ADR) (OTCMKTS:NSANY). Federal supervision will take place in the aforementioned departments of all these companies.
Putting Consumer Protection First
The Consumer Financial Protection Bureau (CFPB) will assist in supervision of non-bank auto lenders. This is said to be the first step in examination of firms. The New York-based Federal Reserve Bank released data recently, according to which, the lenders of this kind generated approximately $187 billion out of a total of $355 billion U.S. auto loans in 2013.
The action taken by the CFPB stemmed from the concerns to protect consumers. Over the past, there have been rising concerns regarding the car loan practices. These concerns also include doubts of consumers being deliberately “forced” into such loans that are beyond their financial reach. Also, it is doubted that the customers are being sold expensive add-on products by the auto companies, without initially disclosing the price of those.
Probe into Securities and Lending Practices
In August 2014, Santander Consumer USA Holdings Inc (NYSE:SC) as well as General Motors Company (NYSE:GM) revealed that the securities and lending practices of these two companies were under the lens of the Justice Department. This was done in context with the sub-prime auto loans.
Joint Scrutiny of CFPB-Justice Department
The Justice Department and CFPB are both working together in a few segments of investigations. It is being monitored if the lenders, as well as the auto dealers, are increasing the car loans costs or not. This is checked especially in case of minorities. Usually, the auto lenders may do so by charging extra interest price.
