On February 24, the Consumer Financial Protection Bureau (CFPB or Bureau) released a blog post, outlining multiple auto lending topics in the wake of rising vehicle prices. According to Bureau of Labor Statistics data, the consumer price index has risen 40% for used cars and trucks and 12% for new cars since January 2021. As a result of these increases, the CFPB expects the total amount of debt and average loan size to continue to rise.

The blog post outlines three primary ways the CFPB seeks to ensure a fair, transparent, and competitive auto lending market in the wake of the significant price changes:

  • Ensuring affordable credit for auto loans;
  • Monitoring practices in auto loan servicing and collections; and
  • Fostering competition among subprime lenders.

Specifically, the CFPB:

  • Plans to monitor lending structures and consumers outcomes, particularly those where lenders rely on high interest rates and fees — even in the event of consumer failure;
  • Is concerned that loan-to-value ratios will begin to rise as they did prior to the global vehicle shortage;
  • Wants servicers to make accommodations available to all consumers;
  • Intends to work with other federal agencies to ensure proper treatment of servicemembers;
  • Is concerned that the use of technologies, such as GPS location devices and license plate recognition technology, may disproportionately impact certain communities and also cause privacy issues; and
  • Wishes to understand potential barriers to entry in the subprime market and seeks to work with the Federal Trade Commission and the Federal Reserve Bank Board of Governors to address issues in the market.

The CFPB’s blog post serves as a reminder that auto finance is still very much on the Bureau’s radar. It also provides a glimpse into the types of items the CFPB will be looking at in auto finance under Director Rohit Chopra.