July 2013 SDADA Column

As summer winds down, the CFPB's assault on dealer reserve continues to gear up. On July 16, 2013, the U.S. Senate confirmed Richard Cordray, a man who is quoted as saying, "consumers should not have to pay more for a car loan simply based on their race" (as if to insinuate that car dealers believe that they should), to a five-year term as the CFPB's director. Sen. Tim Johnson, who chairs the Senate Banking Committee, called the vote "a win for the American people."

From its website, here are the CFPB's definition of "buy rate" and its tips for negotiating a loan:

"A buy rate is the interest rate that a lender quotes to your dealer when you seek a loan directly through the dealer. Your dealer may offer you a rate that is higher than the buy rate. The rate the dealer offers you is called the 'contract rate.' Sometimes the lender pays the dealer a fee that is based on the difference between these two rates, which can give the dealer an incentive to charge you a higher interest rate than you qualify for.

"TIP: Ask the dealer what the buy rate is and offer to pay the buy rate plus a flat fee, rather than paying an interest rate that is above the buy rate. This could save you thousands of dollars over the life of the loan.

"TIP: The dealer may offer you a higher interest rate than you can get directly from a bank or credit union. Shop around to find out who offers the best interest rate."

As we dealers know, indirect loans at the dealership can often undercut the rates on direct-to-consumer loans. I think most dealers would encourage consumers to shop around and see who offers the best and most convenient deal on a loan -- a bank, a credit union or a dealership.

Getting the best overall deal is not as simple as securing the lowest interest rate. Trade-in value; down payment; manufacturer incentives that are exclusive to a captive finance company; the convenience of having multiple lenders bid for the dealership's business; etc. are all factors that affect the value of the deal.

How long before our customers show up at dealerships demanding a loan at the buy rate and not a cent more?

NADA Moves Dates for 2015 – 2018 Conventions

Beginning in 2015, the NADA Convention and Expo will be held Thursday to Sunday, instead of Friday to Monday. “After surveying the membership and exhibitors, the consensus was to end the convention on Sunday, instead of Monday,” said Desmond Roberts, chairman of NADA’s convention committee and a Chevrolet dealer in Hodgkins, Ill. “The Thursday to Sunday timeframe will allow convention attendees to be back at work earlier the following week.” The 2014 NADA and American Truck Dealers (ATD) conventions will be held concurrently in New Orleans from Jan. 24-27 as scheduled from Friday to Monday.

Here are the revised dates for the NADA and ATD conventions:

2015 – San Francisco (Jan. 22-25)

2016 – Las Vegas (March 31 - April 3) 2017 – New Orleans (Jan. 26-29) 2018 – Las Vegas (March 22-25)

For more information on the NADA convention, visit www.nadaconventionandexpo.org. For more information on the ATD convention, visit www.atdconventionandexpo.org.

OSHA Targeting Dealerships

OSHA is targeting automotive repair and maintenance businesses, including new-car dealerships, through a Region 8 (http://www.osha.gov/oshdir/r08.html) Local Emphasis Program. This focused inspection activity, scheduled for between April 16 and at least Sept. 30, 2013, stems from five complaints OSHA Region 8 received in FY 2010, all of which resulted in citations. NADA urges dealerships nationwide to review the inspection directive (http://www.osha.gov/oshdir/r08.html) and their health and safety compliance. Dealerships with specific questions regarding their compliance should contact Lauren Bailey, NADA Regulatory Affairs, at regulatoryaffairs@nada.org or (703) 821-7040 or contact their state or local dealer association.