The NIADA defined its scope and purpose as being a major trade association which works with the used car industry of over 38,000 licensed dealers. The NIADA acts in the capacity of an advocate, educator and promoter for the dealerships. Many of the dealers that are members of the NIADA’s association are Small Business Owners employing five or less employees.
The NIADA reported to the Bureau of Consumer Financial Protection (Consumer Financial Protection Bureau, “CFPB” or “Bureau” on several matters.
A threshhold was set of 10,000 aggregate annual originations per calendar year. this includes: grants of credit toward the purchase of a car, leases, refinancing in order to purchase another car, other refinancing, and purchases of credit.
This ruling would apply to 38 businesses, representing approximately 91% of the non-bank financing business. The Bureau considered raising or lowering the threshold but the level will remain as set. NIADA leaned toward setting a higher threshold however the market share of businesses represented would be negligible.
The question at hand is whether Title Loans should be included in automobile-secured loans. These loans are not currently included in this framework.
A Title Loan is different and distinct from auto financing. Auto financing is the financing of a car with the goal of ownership. A Title Loan occurs when the individual already has ownership of the vehicle and is attempting to get credit for the equity he has on the car. If a person wishes to refinance his/her car, he/she is seeking better terms for his/her loan than the original loan.
Title loans are separate and distinct from auto financing and re-financing and it is questionable whether they should be included in that category.
BHPH dealers have traditionally been left out of the Bureau’s jurisdiction. One of the reasons for this may be that BHPH dealers are typically indifferent to the consumers’ choice of automobile. It is only after the consumer has been checked for creditworthiness that the selection of the car comes into play.
Source: National Independent Automobile Dealers Association