FI showroom red and grey logo
MenuMENU
SearchSEARCH

Bank Eliminates Dealer Markup, Cites CFPB Guidance

Chicago-based BMO Harris Bank issued a notice to its dealer customers this week, stating that it has eliminated dealer markups on indirect auto loans. The policy went into effect Thursday.

by Brittany-Marie Swanson
April 24, 2014
Bank Eliminates Dealer Markup, Cites CFPB Guidance

Photo via Flickr. 

2 min to read


CHICAGO — Dealer customers of BMO Harris Bank were issued a notice Monday that the finance source has eliminated dealer discretion in the setting of interest rates on retail installment sale contracts. The change, according to the notice, is in response to the guidelines issued by the Consumer Financial Protection Bureau (CFPB). 

“While no specific safe harbor has been identified by the CFPB, we have taken these proactive steps to follow current CFPB guidance while continuing to offer significant value to our dealer customers,” the notice, obtained by F&I and Showroom, read, in part.

Ad Loading...

In March 2013, the CFPB issued guidance claiming that potentially discriminatory markups in auto lending may result in tens of millions of dollars in consumer harm each year. The guidance has sparked much debate among dealer associations and lawmakers alike, who have questioned the CFPB’s methods and transparency related to determining the presence of discriminatory practices.

BMO Harris Bank took a survey of more than 3,000 of its dealer customers in February. According to the notice, it used those results to produce “a program that removes dealer discretion in pricing while continuing to compensate [dealers] … fairly and equitably.”

 “…after careful consideration of the needs of our customers and the evolving regulatory environment, BMO Harris Bank is taking the lead in changing its indirect auto lending practices,” said Vice President and Head of Media Relations Jim Kappel in a statement emailed to F&I and Showroom. “We believe the new guidelines create greater pricing consistency at the dealer level and demonstrate the bank’s deep commitment to fair lending practices. 

“We will continue to offer competitive rates and programs as our pricing model, which, combined with the high level of customer service we provide dealers, has helped to drive our growth in this segment.”

Under the new program, contracts must be delivered at the “buy rate” to be eligible for purchase by BMO Harris Bank. The bank will pay a flat fee of 3% of the amount financed — up to $2,000 — for contracts with maturities greater than 35 months.

Ad Loading...

The new policy went into effect on Thursday.  

More Auto Finance

Scrabble letter tiles spelling fraud
Auto Finance•by Gil Van Over•September 30, 2026

Top Five Credit Application Fraud Flags

Compliance audits regularly reveal bad habits that can lead to fraud charges and should have been stamped out decades ago.

Read More →
Paper money, car key fob and calculator
Auto Finance•by Hannah Mitchell•September 14, 2026

More Auto Loans for the Taking in August

Riskier categories were on the uptick for the month as lenders loosened access in several areas while balancing out the exposure in another, Cox Automotive reported.

Read More →
A fan of $100 bills sitting on a white envelope
Auto Finance•by Hannah Mitchell•August 12, 2026

July Was Hot for Auto Borrowers

Credit proved readily available for many, but most loans left buyers in negative territory, Cox Automotive said.

Read More →
Ad Loading...
stacks of coins, a calculator, paperwork, and a pair of glasses in the background, text Lender Experience Drives Dealer Decisions, F&I and Showroom
Auto Finance•by Lauren Lawrence•August 12, 2026

Dealer Lender Preferences Revealed

When lenders provide consistent, fast service, their overall satisfaction scores with dealers greatly improve, according to JD Power research.

Read More →
man sitting at desk using a calculator
Auto Finance•by Lauren Lawrence•August 10, 2026

Auto Refi Savings Surge

Consumers with 84-month auto loan terms who refinanced saved the most on monthly payments, according to a new report by auto refinancing provider Caribou.

Read More →
Tiny toy car in front of small stacks of coins
Auto Finance•by Hannah Mitchell•August 5, 2026

Subaru Enters Lending Business

The automaker follows other brands in adding captive financing in the U.S., and says the move will strengthen its position here.

Read More →
Ad Loading...
Man climbing ladder in front of mountain landscape.
Auto Finance•by Lauren Lawrence•August 3, 2026

Positive Equity Reaches Record High

Mainstream vehicle owners who bought a car seven years ago are likely to have positive equity when trading in for a new vehicle, according to second-quarter Edmunds data.

Read More →
Photo of document next to calculator and inkpen
Auto Finance•July 20, 2026

Dealerships Are Paying the Price for Extended Car Loans

Growing negative-equity scenarios mean such lengthy terms should be addressed in a forward-looking way to make them work for the dealer and the consumer down the road.

Read More →
silver car in background with hand in front holding out a set of keys, Trade-In Trouble, F&I and Showroom
Auto Finance•by Lauren Lawrence•July 20, 2026

Trade-Ins in Negative Equity Reach New Heights

As such trade-ins rise in frequency, so do monthly loan payment amounts and interest rates, according to second-quarter data compiled by Edmunds.

Read More →
Ad Loading...
Two men in suit jackets shaking hands in front of a new-looking white vehicle
Auto Finance•by Hannah Mitchell•July 15, 2026

Auto Credit Plentiful

June numbers show lenders are readily granting access, including to risky borrowers, as consumers leverage themselves to take on high prices.

Read More →