News

The AICPA passed a new credit loss measurement standard (called “CECL”) which requires your implementation effective January 1, 2023, for BHPH operators who carry financial instruments (receivables). The new requirement was issued in Accounting Standards Update 2016 – 13 – Financial Instruments – Credit Losses (Topic 326) and its initial implementation was deferred until 2023. This new standard applies whether the financial instruments (like BHPH installment contracts) and lease receivables are carried on or off the balance sheet. Under current accounting standards (GAAP),

The Federal Trade Commission joined the Consumer Financial Protection Bureau (CFPB) in filing an amicus brief with the U.S. Court of Appeals for the Eleventh Circuit in the case of Louis v. Bluegreen Vacations Unlimited, Inc. The brief asks the appeals court to overturn a lower court decision that denied servicemembers the right to sue to invalidate a contract that they allege violates the Military Lending Act.

Interest-rate hikes from the Federal Reserve are raising average monthly car payments despite falling prices for used cars, according to a study.

The average monthly payment for used cars is 47% higher this year, hitting $551 a month, as compared to 2019, according to analysts at Cox Automotive, a platform that facilitates faster vehicle transactions.

The firm expects monthly car tabs to keep increasing, touching $570 by the end of the year, with the trend continuing in 2023.

By now almost everyone knows that the auto industry is still short semiconductor chips, although the situation seems to be improving. While it’s pretty much a given that electric vehicles use more semiconductors, why do gasoline-powered internal combustion engine (ICE) vehicles use so many chips? And do these chips have attributes that make it harder to crank up the manufacturing capacity when they are in short supply? That’s what this article will try to explain.

The Federal Trade Commission today announced it is extending by six months the deadline for companies to comply with some of the changes the agency implemented to strengthen the data security safeguards financial institutions must put in place to protect their customers’ personal information. The deadline for complying with some of the updated requirements of the Safeguards Rule is now June 9, 2023.

The Safeguards Rule requires non-banking financial institutions, such as mortgage brokers, motor vehicle dealers, and payday lenders, to develop, implement, and maintain a comprehensive security program to keep their customers’ information safe.

Subprime auto loan borrowers are increasingly falling behind on payments, and the value of used cars is dropping, two trends that are clobbering bonds tied to the debt.

Yields on some of the riskiest such bonds have jumped to about 6.5 percentage points more than Treasuries as of last week, a risk premium that’s widened up about 2 percentage points from the end of September, according to data compiled by JPMorgan Chase & Co. Excluding a few weeks during the pandemic, current levels are the widest since 2010.

The New York Police Department said thieves made off with over two dozen vehicles from a luxury car dealership in Queens in the middle of the night on Sunday.

Thieves cut the power to the Carsiri car dealership on Queens Boulevard sometime Sunday night, knocking out the surveillance videos before breaking the locks on the security gate, entering the office and taking the keys to the cars, WNYW-TV reported.

In total, the thieves drove off with 26 cars worth hundreds of thousands of dollars, police say.

With inflation cutting into the budgets of Americans, a growing percentage of people with auto loans are struggling to make their monthly payments.

TransUnion, which tracks more than 81 million auto loans in the U.S., said Tuesday the percentage of loans that are at least 60 days delinquent hit 1.65% in the third quarter, the highest rate for 60-day delinquencies in more than a decade

“Consumers still want to stay current as best that they can. It’s just this inflationary environment is making it challenging,” Satyan Merchant, senior vice president of TransUnion, told CNBC. “It leaves fewer dollars in their pocket to make the auto loan payment, because they’ve got to pay more for eggs and milk and other things.”

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) decreased 2.2% in October from September. The Manheim Used Vehicle Value Index declined to 200.0 and is now down 10.6% from a year ago. The non-adjusted price change in October was a decline of 2.1% compared to September, moving the unadjusted average price down 9.3% year over year.

In October, Manheim Market Report (MMR) values saw smaller-than-normal declines that were relatively stable over the month, culminating in a 2.2% total decline in the Three-Year-Old Index over the last four weeks. Over the month of October, daily MMR Retention, which is the average difference in price relative to current MMR, averaged 98.2%

As new-car sales dropped during the last year due to supply-chain disruptions, so did vehicle trade-ins, leaving dealers to face an unprecedented shortage of used-car inventory. But dealers have been extremely resilient in the face of yet another round of adversity. Here Dennis McGinn, the chief executive officer of Rapid Recon, and Cam Hitchcock, the chief executive officer of America’s Group (which owns America’s Auto Auction), explain how dealers keep putting car buyers behind the wheel of used vehicles by adopting new strategies and technologies.

Federal, state, and local law enforcement partners from across the United States executed a nationwide, coordinated takedown today of leaders and associates of a national network of thieves, dealers, and processors for their roles in conspiracies involving stolen catalytic converters sold to a metal refinery for tens of millions of dollars.

Arrests, searches, and seizures took place in California, Oklahoma, Wyoming, Minnesota, New Jersey, New York, Nevada, North Carolina, and Virginia. In total, 21 individuals in five states have been arrested and/or charged for their roles in the conspiracy.

As expected, the Fed raised the target for the Federal Funds Rate by three-quarters of a percentage point today, which was the fourth straight jumbo increase this year. The biggest news from the Fed’s move was the indication that future increases may be smaller and slower to come.

The Fed has now moved the target rate by 375 basis points (BPs), the most in any year since 1981. By December, the rate moves this year are expected to surpass 1981 and will only be bested by 1980.

The natural level for the short-term rate is widely thought to be 2.5%. With the Fed Funds Rate now at 3.75% – 4.00%, the Fed has tightened the choke on the American economy to the point that the engine is likely to stall out.

The Federal Reserve Bank's recent rate increases to curb inflation have quickly cascaded to the retail US auto industry. In fact, as shown below, average loan rates began climbing before the prime rate moved up. Back in January, the average loan rate increased .2 PP month-over-month to 4.3%, and it has been rising ever since, reaching 5.6% in July. Also, the concurrent increases in the prime rate and the average auto loan rate should not be surprising: the correlation coefficient between the two metrics is a very strong .95.
However, these rate increases have varied depending on the buyer's credit standing. While the most credit-worthy customers (781 - 850) have seen rates more than double from May 2020 to 4.4% this past August, households with the lowest credit scores (300-600) have actually seen a .1 PP rate decline to 10.6%. This lower tier of customers, though, still are paying a rate more than double that of the top tier.

DETROIT — All summer long, Aleen Hudson kept looking for a new minivan or SUV for her growing passenger shuttle service.

She had a good credit rating and enough cash for a down payment. Yet dealerships in the Detroit area didn't have any suitable vehicles. Or they'd demand she pay $3,000 to $6,000 above the sticker price. Months of frustration left her despondent.

“I was depressed,” Hudson said. "I was angry, too.”

A breakthrough arrived in late September, when a dealer called about a 2022 Chrysler Pacifica. At $41,000, it was hardly a bargain. And it wasn’t quite what Hudson wanted. Yet the dealer was asking only slightly above sticker price, and Hudson felt in no position to walk away. She's back in business with her own van.

Ignite Consulting Partners continued its Tip of the Week series by again focusing on the enhanced Safeguards Rule set to be implemented by the Federal Trade Commission.

Ignite said that independent and buy-here, pay-here dealerships should have completed or at least are in the process of compiling their risk assessments and formulated a report mandated by the FTC.

The firm said that these reports should contain details based on your investigation about events where the FTC says pose a foreseeable risk “to the security, confidentiality, and integrity of customer information.”

After back-to-back monthly gains, US consumer confidence declined in October by more than expected as uncertainty around the Federal Reserve's interest rate hikes and persistent, high inflation continue to drag on Americans, according to the latest report from the Conference Board.

The Conference Board's Consumer Confidence Index slumped from 107.8 to 102.5 from the previous month. Bloomberg economists had forecasted a smaller dip to 105.9.

The largest U.S. banks are warning of trouble ahead in auto loans as dropping prices for used vehicles risk leaving borrowers underwater.

Wells Fargo & Co. said that higher loss rates for loans it originated late last year contributed to an increase in write-offs for the period. Ally Financial Inc., the country’s second-largest auto lender, saw charge-offs for retail auto loans quadruple in the third quarter. And Fifth Third Bancorp said it’s pulling back on originations.

The Federal Trade Commission announced today that it is exploring a rule to crack down on junk fees proliferating throughout the economy. Junk fees are unnecessary, unavoidable, or surprise charges that inflate costs while adding little to no value. Consumers can get hit with junk fees at any stage of the purchase or payment process. Companies often harvest junk fees by imposing them on captive consumers or by deploying digital dark patterns and other tricks to hide or mask them. The agency is seeking public comment on the harms caused by junk fees and the unfair or deceptive tactics companies use to impose them.

Many people might feel disgusted when they spot the price of a box of butter, a bag of salad or, frankly, just about anything else at the supermarket. But generally, many can keep spending, especially if they've gotten a raise at work or they're fortunate enough to have some cash sitting on the sidelines.

Yet make no mistake, plenty of people are on edge as they see inflation soar, jobs get cut at some major companies and some homes for sale sit a bit longer on the market than they did just months ago.

The nationwide average price of a gallon of gas has fallen 8 cents in the past week, now sitting at $3.84, according to AAA. The Biden administration has announced plans to release millions of additional barrels of oil from the Strategic Petroleum Reserve this winter, anyway.

Georgians are paying the lowest prices in the nation today, at $3.24 per gallon. California residents see the highest pump prices — $5.88.

Prices briefly flirted with $4 per gallon early this month as the nation’s supply took several hits. A refinery fire in Ohio and seasonal maintenance at some processing centers combined to lower the nationwide stock of gasoline. Then the OPEC+ consortium of oil-exporting countries voted to slow oil production.