WASHINTON, D.C. — The Massachusetts attorney general is taking a greater interest in the practices of used-car lenders failing to consider borrowers’ ability to repay, Max Weinstein, chief of the Consumer Protection Division, said at CBA Live 2019.
The move draws on a Massachusetts precedent in the mortgage origination space in which a subprime lender was making loans without regard to borrowers’ ability to repay, “essentially dooming borrowers to foreclosure” after a teaser interest rate, Weinstein said.
“That is a precedent we think has equal force when it comes auto lending,” he said.
“While most people do not live in their vehicles, most people in Massachusetts — and I’d imagine nationally — need their car to get to work,” Weinstein said. “If you can’t drive, you may lose your job, along with a number of other problems. So, setting someone up to fail in regards to an auto loan is a very serious thing, and no less serious than setting someone up to fail with a home purchase.”
The Massachusetts attorney general’s office is actively investigating and enforcing an ability-to-pay case in regard to a buy-here, pay-here dealer that finances its own purchases. The regulator’s interest isn’t limited to that specific sector of auto finance, Weinstein said.
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