Wednesday, Mar. 28, 2007, 08:00 PM UPDATED 11:59 AMBy Nick Zulovich
WASHINGTON, D.C. — The American Financial Services Association recently shared its latest information on happenings in the auto industry, touching on dealers' acceptance of e-contracting, New York leasing suit and more.
AFSA Vehicle Finance Panel Tackles E-Contracting
At the recent AFSA Vehicle Finance Conference, one of the highlights was a panel featuring Gary Lorenz, Wells Fargo Auto Finance; Tim Russi, president of Bank of America Dealer Financial Services; John Haines, chief executive officer of HSBC Auto Finance; and Steve Lambert, CEO of Nissan Motor Acceptance Corp.
The executives sat down to discuss whether or not e-contracting at dealerships is gaining more acceptance. Their conclusion was that it is not.
"A panel discussion at the recent AFSA Vehicle Finance Conference showed that e-contracting has not gained wide acceptance among auto dealerships, even though it could cut the time that dealers wait to get paid for sales," association executives reported.
On the lender side of business, the story is quite different, officials found.
"We believe it's going to be the future," explained Lorenz, of Wells Fargo Auto Finance.
Meanwhile, Russi's biggest questions was, "When is it going to take off?"
According to the panel, "The biggest obstacles include: 1. Dealers and employees slow to adopt new technology; 2. Dealerships must conduct constant training because of high employee turnover; and 3. E-contracting programs are too spread out to make a difference in a region."
Buying a Vehicle with Home Equity?
According to data uncovered by AFSA from Synergistics Research of Atlanta, nearly a quarter of homeowners used a home equity line of credit to buy a vehicle last year.
Additionally, 8 percent of consumers took out a second mortgage to purchase a vehicle, AFSA reported.
"The trend increased over the past 10 years due to a drop in interest rates and climbing property values," association executives said. "But whether the strategy is a sound financial decision is up for debate."
Don Taylor, a columnist for , pointed out, "I issue a note of caution on this. If you don't have the discipline to do more than the minimum payments on these loans, then this is not a good idea."
AFSA officials noted, "If the loan is not paid early, any savings on taxes would be erased by the interest due. Situations could even arise where payments on cars are being made well after the car is gotten rid of."
AFSA Files Amicus Brief in N.Y. Leasing Suit
In other recent news, AFSA announced it filed an amicus brief (friends of the courts brief) on behalf of the defendants in the Graham v. Dunkley and NILT Inc. (Nissan) case.
As of press time, officials said the suit is under appeal in the New York Supreme Court Appellate Division — Second Department.
"AFSA believes that the court should uphold the federal Transportation Equity Act of 2005, which intended to preempt vicarious liability for the negligent acts of the driver," officials stated.
"Before that law, it was possible under New York state law, for someone involved in an accident to sue not only the person who caused the accident, but also the rental car and/or the leasing company," executives continued. "The court is being asked to determine whether the federal law does preempt the state law."
Iowa Senate Approves Restrictions on Title Loans
Citing a recent report, the AFSA said the Iowa Senate has approved new limits on car title loans.
"This initiative, which now proceeds to Gov. Chet Culver, would restrict yearly interest rates to 21 percent on car title loans, down from the present 300 percent," officials said. "In passing the bill, the Iowa Senate rejected cautions from industry authorities that the limits would force the industry to leave Iowa.
"Sen. Joe Bolkcom (D-Iowa City) also disagreed with contentions that the bill would terminate the sole available credit alternative for the working poor," according to the association. "Sen. Matt McCoy (D-Des Moines) attempted the lessen the measure by permitting the stepper interest rates but mandating lenders post a notice informing borrowers about the risks.
"He (McCoy) told legislators that they would not be shutting down an industry, since car title loans can be obtained online," officials concluded.