To the Editor:
I'm glad "Super flat finance fees gain traction" was in the May 3 issue even if the topic is about 10 years overdue. Auto dealers and businesses complain about government interference and unnecessary regulation. Then they introduce policies and procedures that just ask for oversight.
In the 1990s, there were lawsuits and public dismay about dealer driven finance rate markups, alleging various types of discrimination. I anticipated the result would be a flat finance fee (paid directly to the dealer) of around 2 to 3 percent of the total amount financed.
Instead, dealers were capped at a 2-3 percent over their buy rate. As a result, the door was left open for dealer finance representatives to decide arbitrarily which consumer would get what percent over the buy rate. The door to various types of discrimination was left open; only the range was reduced.
Transparency and industry self regulation are the keys to securing the trust of the consumer and their government representatives, from elected officials to federal and state licensing and regulatory agencies.
Now is the time for major lenders, captive lenders and especially large dealer organizations to take the initiative to set up a fair system based on stratified levels of the dollar amount financed. All F&I personnel should disclose and administer the same rate issued by the lender to a specific customer regardless of gender, age, race, appearance or any other subjective variable.