The agency revealed that at present, there are about 1,585 complaints on vehicle financing. Of which, only about 309 car loans complaints were solved through consumer relief. Monetary compensation was given to 105 complainants for settlement. However, these complaints are just a small part of the thirty million car loans made every year.
Industry analysts say the CFPB’s release of reports addressing issues like car loans and leases is just another sign that the agency is trying to get a hold of this sector. CFPB was only established in July 2011 through the Dodd-Frank financial reform law where auto loans, leases and other related transactions are not covered.
CFBP only promotes transparency
CFBP, on the other hand, said that the reason for such move is only to promote transparency in the industry. The agency has also announced its plans to sue some banks due to inappropriate lending practices that resulted to hefty interest rates paid by the ethnic minority.
CFBP’s director, Richard Cordray, explained that the data presented is designed for the consumers’ benefits and to promote honesty in the business sector.
Aside from the skyrocketing interest rate, complaints also covered issues like misleading ads, late fees, surprise changes in deals and car repossessions.
Auto lenders and banks involved
The report revealed that auto lenders and banks involved include Ally Financial, JPMorgan Chase, Capital One, Santander Consumer USA and Wells Fargo. The highest number of complaints since March 2012 was found to be against Wells Fargo, with 329 total number of complaints.
CFPB report also disclosed that 31 complaints are still left unanswered, 83 closed without the outcome report, 186 closed without relief and 974 closed with appropriate action taken. However, there were some banks and lenders that responded to the complaints but their answers were disputed by the consumers.
On the other hand, Ford has a recorded of 21 consumer complaints, Toyota with 27 and Honda with 28. These companies’ car loans and lending arms are included in the top ten lists with the highest number of complaints.
How banks respond
Kathleen Day, spokesperson of the Center for Responsible Lending, said some banks have already made quick resolutions because they don’t want to be included on the list. This is especially true with major U.S. banks.
CFPB did not reveal the specific complaints for reasons of confidentiality. The bureau reiterates that it only acts as an intermediary between the consumers and banks or other lending institutions but not to negotiate in either’s behalf.