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#1751934 - 10/24/12 04:43 PM Indirect Auto Loans
Bobbie Arvold Offline
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Joined: Mar 2009
Posts: 14
We are looking to do more indirect auto loans. We offer a standard buy rate but have no control over the rate the dealer offers the customer. Does anyone think that could be a fair lending issue if the dealer offers different interest rates to different clients? How could that effect our bank?

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#1751958 - 10/24/12 05:17 PM Re: Indirect Auto Loans Bobbie Arvold
Anonymous
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Sounds like a fair lending issue waiting to happen if your bank is not vigilant or don't conduct regular internal audits on these loans. You should have dealer/vendor contracts that make dealers aware of their fair lending obligations to the bank and give you room to drop dealers who are or are suspected of being out of compliance.

(And if your bank is $10b+, you're under the CFPB. Under Dodd-Frank, auto dealers are exempt from CFPB oversight. You as the lending institution need to step up and shoulder the compliance.)

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#1751970 - 10/24/12 05:26 PM Re: Indirect Auto Loans Bobbie Arvold
straw Offline
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straw
Joined: Nov 2002
Posts: 9,121
You should place a cap on the rate dealer can offer customer.

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#1752157 - 10/24/12 08:51 PM Re: Indirect Auto Loans Bobbie Arvold
Anonymous
Unregistered

We recently went through both S&S with FDIC and a compliance exam with FDIC. Fair Lending was looked at hard, and have significantly increased indirect lending, without a problem. Consistency in your buy rates is key, and having a cap on dealer's of 2% over (that's what we use, others are different). It keeps you out of hot water (or at least us it did). I do understand however that different exam teams are different, that's some of the fun (sarcasm).

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#1752197 - 10/25/12 02:10 AM Re: Indirect Auto Loans Bobbie Arvold
Rocky P Offline
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Joined: Jun 2003
Posts: 7,401
Florida
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