Auto lenders would be well advised to keep up their guard as states — particularly blue ones — take steps of their own to crack down on what they see as abusive practices.
The subprime auto lender failed to disclose that it received fees for referring borrowers to CarMax, the used-car dealer, according to California's financial regulator.
Growing numbers of small subprime auto lenders are closing or shutting down after loan losses and slim margins spur banks and private equity owners to cut off funding.
California officials had accused Advance America of wrongly assessing Department of Motor Vehicles fees on its payday loans to skirt the state's interest rate cap.
The Pew Charitable Trusts has released a set of 10 standards for banks and credit unions that want to to offer small loans to subprime customers. Among its ideas: keep monthly payments at or below 5% of the borrower’s paycheck and make loans available quickly through digital channels.
After reporting its fourth-quarter earnings, the subprime auto lender said it expects the new tax law to enable more car owners to stay current on their loans.
The Detroit company recorded an 11% increase in car loans and leases originated during the fourth quarter, as well as a jump in yields. Ally appears to be benefiting from Wells Fargo's substantial retrenchment in auto lending.
The Stamford, Conn.-based credit card issuer saw improvement in late payments by its customers, but the pace of loan growth also slowed during the fourth quarter.
The Kennesaw, Ga.-based company, which targets borrowers with blemished credit records, has acquired LoanHero, which specializes in loans at the cash register.
