Guest Blogger Arone Silverman

The Center for Responsible Lending recently released a report on car lending practices found in North Carolina. The study highlights a couple of problems affecting Carolina consumers. It found consumers who rely on the dealer to finance their auto loans are vulnerable to a litany of predatory practices. The dealer is usually the initial creditor in the transaction, but while making the deal also arranges the sale of the loan to a bank or finance company. Without fairness and transparency in the process of financing a vehicle, consumers are subject to manipulation that can add thousands of dollars to its cost.

Between yo-yo tactics, kick-backs and loan packing practices, North Carolina residents paid over $665 million in 2007 to car dealers. Right now there’s a bill in N.C. legislature aiming at banning such practices.

HB 1223:
Bans Dealer Kickbacks: Ban the back-end compensation dealers receive for selling more costly loans to consumers.
Prohibits "Yo-Yo" Scams: Prohibit yo-yo scams and ensure more meaningful enforcement to prevent them.
Addresses "Loan Packing": Provide a consistent and transparent means of presenting the cost of the vehicle, all fees, and add-on product sales.