CFPB to enhance data transparency to better monitor auto loan market

The Consumer Financial Protection Bureau (CFPB) announced Thursday a new effort to collect auto lending data to better monitor the market for risks to consumers and the economy.

As U.S. PIRG Policy Advocate R.J. Cross testified before Congress in 2019:

“Americans currently owe more for our cars than we have at any point in history…[and] delinquencies are rising … in large part due to … abusive and deceptive tactics that target borrowers with the most to lose. I think we can all agree that American consumers deserve better.”

Photo by CSPAN | Public Domain

Since sharing those findings from U.S. PIRG Education Fund’s “Driving Into Debt” report, consumer complaints to the CFPB about auto lending spiked during the COVID-19 pandemic, and the total amount in outstanding auto loan debt carried by U.S. consumers has only increased. 

Alarmingly, the CFPB warns that:

“At its current trajectory, auto loan balances will surpass outstanding student loans in the first half of 2023…Over the past two years, car prices have risen significantly, leading to larger loan amounts and higher monthly payments. These loan size increases are beginning to have an impact on consumers and households. Recent data show an increase in auto loan delinquencies, particularly for low-income consumers and those with subprime credit scores.  We also see evidence that some consumers may be getting priced out of the current market.”

This is particularly concerning given the realities that owning a car is the price of admission to the economy and society in much of America.

Financing the purchase of a car was already a minefield for consumers and appears to only be getting worse. 

That’s why the CFPB’s announcement to build and analyze a new data set to better understand and get ahead of troubling trends in the auto loan market is an important first step for consumers.

As part of its new effort, the CFPB is convening stakeholders and taking comments from the public until December 19, 2022.