Passing the Brownback Amendment is more important for the protection of consumers than it is for auto dealers. The spin from Washington is that auto dealers need to be regulated but no one would ever suggest that car dealers in anyway contribute to the financial crisis. In case you didn't know a car is not a house! The recent financial problems were caused because Wall Street was repackaging home loans and selling them off to other groups without any sense of the real value of the property supporting the loan. Wall Street was not reselling auto loans. Fannie Mae and Freddie, Bear Stearns and Lehmans have nothing to do with auto loans. The people that need to be regulated should be regulated, not entrepreneurial retail small businesses that are the economic engine of this country.
Auto dealers are the wrong target here and should not be included in this reform. Mr. Obama is either being misinformed or (I pray this is not the case) he has an agenda to give a handful big banks more power and the consumer fewer choices. The idea that auto dealers somehow contributed to the financial problems because they help car buyers with loans does not have any basis in reality.
How do I know? My company has worked with large and small companies over the last 25 years to strengthen their processes and procedures and ensure the companies are more effective with client retention and customer loyalty. As a result I have been exposed to the inner workings of auto dealers and manufacturers. I know how they make their money, how they operate, where their money is made and what it takes for them to be profitable. Contrary to the public's belief car dealers make most of their money servicing automobiles, not selling them, much less financing them. If car dealers are making too much money, why were thousands of them recently shut down by the manufacturers?
So that the public understands the truth; auto dealers provide financing to auto buyers as a service to make it easy for the customer to buy a car and get a loan in one stop. The customer has the freedom to get the money from their own bank, credit union or have the auto dealer provide options. Financing is merely a service the dealer provides the consumer. Options give customer choices and choices provide competition which leads to more competitive rates for customers. There exist rates, as I write this, as low as 0% financing for customers because the manufacturer and dealer are working together to provide low cost financing and make the automobile purchase more affordable. Try to get 0% from your bank or any bank- you can't!
Rather than listening to all the spin from Washington or even believing me, call your bank today and then call your favorite auto dealer and I assure your dealer can get you a lower rate from the very same bank where you have an account. That's right, a finance department in a car dealership is actually able to get you a lower rate from your bank, than you can from your own bank.
Getting a loan from a car dealer is no different than going to Macy's or Target to buy clothes and they offer you a credit card on the spot to fund the purchase. It is a service point for the dealer, not a financial opportunity. Do car dealers make money on this service? Sometimes they do and sometimes not; depending on the loan, loan amount, the terms, the credit rating and other factors. If it wasn't for the retail auto dealer's many of the credit challenged would never obtain auto financing because traditional banks won't even consider them. Without the option provided by the car dealer the person with poor credit score would not be able to acquire transportation they need.
Vote to pass the Brownback Amendment. It is in the best interest of every American to keep lending competitive. Auto dealers did NOT contribute to the financial problems of this country! The lending services of the auto dealer force banks to be competitive and make it cheaper for Americans to get a loan.
Call your Senators through the Capitol Switchboard (202-224-3121) and tell them to vote "YES" on the Brownback.
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Grant Cardone, Author and Business Expert