CFPB Auto Lending Rule May Be On The Way Out

An Obama-era regulation intended to restrain discriminatory lending practices by automobile lenders appears to be on its way out.

On April 18, under the Congressional Review Act (CRA), the Senate voted to repeal the Consumer Financial Protection Bureau's (CFPB's) 2013 guidance on dealer markups in the automobile lending process. The CFPB's guidance was in response to discriminatory lending allegations arising out of auto dealers' use of third-party lenders to secure financing for consumer automobile purchases. When consumers purchase through dealerships, dealers will often coordinate indirect financing through a third-party lender. In some cases, dealers could charge consumers a higher interest rate than the rate quoted by the lender, also known as a "dealer markup."