Move cars off the lot faster than you can drive them
Are you sure you’re following the most important buy here pay here regulations?
Non-compliance is a problematic issue for a lot of dealerships. Some offenses may give you a simple warning or a fine, but some could put you out of business. Your success depends on your knowledge of buy here pay here regulations, and how good you are at staying compliant.
Paying a membership fee to stay on top of new buy here pay here regulations, is a lot better than paying substantial fines when you break them.
One of the best ways to ensure that you are on top of buy here pay here regulations is to sign up with dealer associations such as the NADA 20 Group or The National Alliance of Buy Here Pay Here Dealers. The information they provide is well worth the cost of the yearly membership.
These professional associations keep you informed of any significant changes in the auto industry, so you have the important information you need to share with your team. Even your most experienced staff needs to continue their education, so don’t forget to keep them in the loop, too.
Now that you have some helpful compliance resources, there are some other buy here pay here regulations you never want to forget:
Gramm-Leach-Bliley Act Privacy Rule
Sometimes dealers become desensitized to the amount of personal information they have going in and out of their hands on a daily basis. Scraps of paper with customer information, pay stubs, copies of licenses and other sensitive information are misplaced or improperly disposed of, which is a significant risk to not only your customer but to your business. If you get audited, and they happen to find something in one of the dealership trash cans, you can expect some pretty hefty fines. And while you think it’s absurd that they would go picking through your trash, it has happened. Be smart with customer information and avoid substantial fines. It’s that simple.
Clean Desk Policy
Most franchise dealers have already implemented a clean desk policy because of brand regulations. Cadillac’s Pinnacle program is very strict about clean desks, partly for aesthetic reasons, but mostly because of information security and red flag rules. This policy gives your dealership an excellent opportunity to reduce its paper waste, cut costs, and increase efficiency.
Because BHPH dealerships process financing in-house, extra caution is necessary. You can use a CRM tool and your DMS to store sensitive customer information, and locked file cabinets for all pending and completed deals. It’s important to keep these documents secure, and adhering to this one policy could save your dealership from an endless list of issues. The Disposal Rule also ties into this regulation, and the FTC has all the facts you need to assess your situation and make changes if necessary.
Don’t engage in discriminatory lending
You may have seen talk about discriminatory lending in the news. The National Fair Housing Alliance (NFHA) shared a study in January 2018, showing the high rate of discrimination people of color face when buying cars. This research shows that on average, people of color pay almost three thousand dollars more than a white customer, which is entirely unethical and can get you in big trouble.
Fifth Third Bank learned that the hard way in 2015. They had to pay about 3 million dollars back to clients, and 500,00 to the CFPB civil penalty fund for violating this rule. Treat all your clients equally. Each person that walks in your door is a chance to make a sale, regardless of their appearance.
Buy here pay here regulations are part of the landscape for auto dealers. It’s not always easy to keep track of them, so it’s important to make sure you do a quick monthly check for any new rule changes. The FTC is an excellent resource if you need to seek confirmation of information you feel to be inaccurate. Compliance maintenance may seem tedious, but when you keep up with it, you can save time and up to millions of dollars.
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