CFPB’s Second Report on 2023 Auto Finance Data Pilot
Last week, the Consumer Financial Protection Bureau (CFPB) issued the second in a series of reports based on its 2023 Auto Finance Data Pilot. While the first report discussed negative equity in vehicle finance transactions, the new paper provides a CFPB analysis of available data relating to vehicle repossessions and discusses statistical trends in repossessions from 2018 to 2023.
AFSA commends the CFPB for issuing a report that shares objective observations about conditions in the market relating to repossession. With large disruptions in the vehicle finance markets due to the pandemic and voluntary steps by industry to modify finance contracts for consumers, the past several years have been extraordinary. And this report makes clear that some observations are correlations between independent events for which causation cannot be asserted.
While the CFPB continues to discuss repossession in terms of harm to consumers, it is important to remind policymakers and consumers of the other side of the story. Repossession is a contractual remedy for default that is well-established under state laws, including the Uniform Commercial Code. Repossession is not a hidden, obscure remedy. On the contrary, consumers are well aware of the consequences of not paying their auto loans. The possibility of repossession as a remedy to default is clearly explained in standard vehicle finance contracts.
Vehicle finance companies work extremely hard to follow legally allowable procedures (laws, regulations, rules, legal precedents, etc.) to service delinquent vehicle finance accounts, including those that go into repossession. They have robust policies and procedures and rely on legal and compliance professionals. Though a last resort, repossession is sometimes the only option available. AFSA members recognize that the repossession process must be handled cautiously and are committed to ensuring that repossessions are conducted professionally and in full compliance with all applicable laws and regulations. AFSA members stress to their repossession contractors the necessity that all repossessions be peaceful and fully compliant with the law.
January 29th, 2025
