Insights and Publications

The Rapidly Changing Landscape of Indirect Auto Lending

June 5, 2015

For decades, indirect auto lending has allowed customers to quickly and conveniently finance their vehicles without the hassle of going from bank to bank to apply for auto loans. However, it isn’t just the end-consumer who benefits from indirect lending, dealerships have experienced a significant benefit from this convenient practice as well. With incentives such as dealer participation rates, indirect lending has become an extremely lucrative practice and an absolute must-have for any dealer who wants to be competitive and successful in today’s market.

In recent years, there has been an increased focus on the indirect auto lending industry and the consequences that incentives like participation rates and limited dealer oversight can have on the end-consumer. A focus on discriminatory practices and disparate impact have grown to the point where Congress is being urged to increase the oversight authority of the Consumer Financial Protection Bureau (CFPB) to include auto dealers using indirect programs.

The days of “hands-off” management and oversight of auto lenders’ dealer networks are in the past, with growing expectations that dealers are treated very similarly to auto lenders’ vendors. Actively implementing the steps outlined in this white paper can bring benefits that will far outweigh the costs of non-compliance.

Download the white paper The Rapidly Changing Landscape of Indirect Auto Lending to learn about the origination aspects of auto lending, the ongoing debate over dealer participation rates, disparate impact and discriminatory practices, effectively managing a dealer network and discriminatory practices in aftermarket product sales.