The Consumer Financial Protection Bureau (CFPB) is inviting comment on whether the 2015 larger participant rule for automobile financing remains the right measure of market significance. Comments are due September 22, 2025.
Current Rule Snapshot
Market |
Current Threshold |
Rule Adoption Year |
Comment Deadline |
|
Automobile Financing |
10,000 annual originations |
2015 |
September 22, 2025 |
Under the current rule, 12 C.F.R. § 1090.108(b), a nonbank is a ";larger participant" if it originates more than 10,000 automobile financing transactions per year, including grants of credit for the purchase of an automobile, refinancings, and leases where the automobile is used for personal, family, or household purposes. The definition excludes transactions for vehicles used primarily for business or commercial purposes and certain types of fleet financing.
The current rule defines "annual originations" to mean the sum of the following transactions for the preceding calendar year: credit granted for the purchase of an automobile; refinancings of such obligations (and any subsequent refinancings thereof) that are secured by an automobile; automobile leases; and purchases or acquisitions of any of the foregoing obligations.
In its analysis accompanying the advance notice of proposed rulemaking, the CFPB reported that data from Experian Velocity℠ covering the period from February 1, 2024 through January 31, 2025 shows that about 63 entities would meet the larger participant threshold. The Bureau said this finding provides an independent basis for federal supervision, even if those firms did not qualify under other authorities. The group includes specialty finance companies, captive finance arms, and buy-here-pay-here auto lenders.
Questions for Comment
The advance notice of proposed rulemaking asks the following questions:
1. Is 10,000 aggregate annual originations an appropriate threshold for determining which entities should be considered larger participants in the automobile financing market? If not, what type of threshold would be more appropriate and why?
2. How would consumers be impacted by a potential increase in the threshold? Submissions of data related to the benefits or costs to consumers of the current rule and any particular change to the threshold are encouraged.
3. How would changing the current threshold for larger participants alter the behavior of participants in the automobile financing market? How would these changes benefit or harm consumers and participants? Would those changes in behavior have impacts beyond this specific market?
4. How would changing the current threshold for larger participants affect the Bureau's ability to address potential market failures in the automobile financing market and related areas?
5. What are the costs to covered entities that are specific to the Bureau's supervisory authority for larger participants in the automobile financing market? Submission of specific figures as to staffing, staff time, and other resources is encouraged. How often are these costs incurred for larger participants under the current rule that are close to the current threshold for being larger participants?
6. What are the costs to covered persons that are not specific to the Bureau's supervisory authority, but are specific to being a larger participant in the automobile financing market? For instance, are there costs of monitoring status as a large participant or costs related to complying with relevant federal statutes and regulations beyond what the firm would find reasonable absent the possibility of supervision?
7. Are there costs to covered persons from the current larger participant rule that specifically apply to firms whose aggregate annual originations are lower than, but close to, the threshold?
8. Are there costs or benefits to consumers, including rural consumers, servicemembers, or veterans, of raising the larger participant threshold?
9. Do small business concerns, as defined by the Small Business Administration, or other smaller or mid-size entities qualify as larger participants under the current threshold in the automobile financing market? Do these entities incur costs of compliance with their larger participant status that are not in proportion to their size relative to other larger participants in the automobile financing market?
10. Should the Bureau's test for defining larger participants in the automobile financing market account for the Small Business Administration's size standards? If so, how?
11. Are there significant recordkeeping requirements that would be reduced by raising the larger participant threshold?
12. What other specific costs or benefits, not mentioned above, would a change in the larger participant threshold have for consumers and covered persons?
13. In addition to data from the Economic Census or VelocitySM data, what sources of data, if any, are available that can reliably inform estimates of the current size of the firms in the automobile financing market; the participation in the market by nonbanks, banks, and credit unions; and the number of firms that qualify as larger participants?
14. Should the Bureau reconsider the threshold for aggregate annual originations to qualify as a larger participant in the automobile financing market?
15. What threshold and number of participants allow the Bureau to effectively focus on the largest participants and efficiently use its resources?
16. Should the Bureau consider separate thresholds for each type of participant in this market, i.e., captives, specialty finance, and BHPH finance companies, to capture the largest participants of each type?
17. Should the threshold ensure that the Bureau's supervisory authority covers a mix of entity types (captives, specialty finance, and BHPH finance companies) and both the prime and subprime markets? If so, what is the appropriate mix? Or should supervision focus on the automobile financing companies that produce the largest number of originations, which are currently primarily captive nonbanks that originate prime loans?
18. Among entities above the current threshold, how do the compliance costs and other costs imposed by larger participant status vary by:
a. The type of nonbank entity;
b. Number of originations;
c. The share of the entity's lease versus loan originations; and
d. Characteristics of the loan or lease?
19. Among entities above the current threshold, how do the risks, costs, or benefits to consumers of a potential increase in the threshold vary by:
a. The type of nonbank entity;
b. Number of originations;
c. Whether the consumer took out a lease or a loan; and
d. Characteristics of the loan or lease?
Why It Matters
A revised threshold could alter which lenders, dealers, and finance companies fall under CFPB oversight, with compliance implications across the auto finance sector.
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Auto finance providers should evaluate their origination numbers, consider operational metrics, and submit comments to the CFPB by September 22, 2025.
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