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Election 2008: What’s at Stake for Auto Finance?

October 2008, F&I and Showroom - Feature

by Editorial Staff

With both presidential candidates describing themselves as agents of change, the vehicle finance industry likely will have to adjust to numerous new policies and requirements regardless of who’s elected, says the head of the industry’s national trade association.

“Each candidate has proposed tax plans that will have widespread ramifications for consumers and the industry alike,” notes Chris Stinebert, president and chief executive officer of the American Financial Services Association (AFSA). For example, the Republican candidate, Sen. John McCain (R-Ariz.), has indicated his plan would maintain the small business tax incentives enacted in 2001 while reducing corporate income tax rates, which are among the highest in the world. For the vehicle finance industry, a cut in corporate taxes to bring them on par with other tax rates in the global market could enhance profitability.

In contrast, Sen. Barack Obama (D-Ill.), the Democratic candidate, has detailed a plan to provide tax relief for 90 percent of working Americans, leaving the top five percent of Americans with a tax increase. Presumably, working Americans would use the tax relief money for vehicle down payments, among other purposes. However, a large number of financial services business owners, executives and dealers who are in the top five percent would feel the pinch.

In addition to deciding the next president, November’s elections will affect the composition of key Congressional committees, such as those that oversee financial services, commerce and judiciary issues. “There’s also the question of how close the Democrats will get to a filibuster-proof majority in the Senate,” says Stinebert. “If this happens, it could mean more latitude for the committee chairmen to move bills that may be intended to provide expansive consumer protections, yet result in reduced credit availability.”

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