March 31, 2026

Auto Loan Origination and Servicing - March 2026

Collin Grier, Viona Harris, Courtney Hayden, Christina Hennecken, CC Jiao, Jackie Odum, Kelsey Pelagalli, Justine Potter, Angelica Rankins, Matthew Riffee, Sabrina Rose-Smith, W. Kyle Tayman Goodwin + Follow Contact LinkedIn Facebook X Send Embed

Looking Ahead to 2026

Building on the shifts seen in 2025 when enforcement actions decreased while the Consumer Financial Protection Bureau (CFPB) maintained robust supervisory activities, the regulatory environment for auto lending in 2026 is expected to remain fragmented. At the federal level, auto lending was among the markets most directly affected by the CFPB’s broader effort to limit its own authority. The CFPB’s reduced enforcement posture last year — resulting in only a single enforcement action — combined with proposed rulemaking that would raise the “larger participant” threshold in the auto financing market suggest continued limited federal oversight in 2026, particularly for midsize and independent lenders. On the other hand, state attorneys general are expected to maintain their established enforcement activities, providing a steady counterbalance to federal retrenchment. Legislative initiatives — such as New York’s Fostering Affordability and Integrity through Reasonable (FAIR) Business Practices Act, which allows the attorney general and consumers to take action against corporations for unfair, deceptive, and abusive practices, including issues like “junk fees” 1 and the steering of borrowers into higher-cost loan products — and ongoing state-level settlements point to continued emphasis on transparency and fair lending practices in the auto lending space.

Key Trends From 2025

In 2025, Goodwin tracked only three publicly announced auto lending enforcement actions, in a continued downward trend from the eight actions tracked in 2024, nine actions tracked in 2023, and 13 actions tracked in 2022. The amount recovered by these enforcement actions totaled $13.1 million.

In the News

In January 2025, the CFPB signaled that strengthening financial protections for military families continues to be an enforcement priority via its report on service members’ experiences in the auto lending market. According to the CFPB, although service members and civilians pay similar vehicle prices, service members typically borrow more, put less money down, and receive loans with higher annual percentage rates and longer terms, which results in higher monthly and lifetime costs. The report highlights that more than 70% of service members purchase add-on products — often at higher prices than civilians — which further increases their financial burden. These patterns, the CFPB notes, stem in part from service members’ unique mobility demands and vulnerability to aggressive lending practices.

While service member protections remain a focus area for the CFPB, the agency has indicated it will scale back regulation of smaller auto lenders. In August 2025, the CFPB issued a notice proposing to raise the CFPB’s larger participant threshold in the auto financing market. According to the CFPB, the current threshold creates “compliance burdens for many entities” and diverts limited CFPB resources to determine which entities are subject to the CFPB’s supervisory authority. The proposed rule would raise the threshold up to $1.05 million aggregate annual originations, which would reduce the number of larger participants by more than 90%. This change would exempt most independent and midsize lenders from routine CFPB examinations, reflecting the CFPB’s effort to minimize resource constraints.

In October 2025, California’s governor signed the California Combating Auto Retail Scams (CARS) Act into law, which contains various measures to make vehicle purchases more affordable and consumer-friendly. The CARS Act prohibits dealers from misrepresenting material information about vehicle sales, including pricing, financing terms, and vehicle availability. It also requires clear, conspicuous disclosures about total price and add-on products and bars dealers from charging for add-ons that provide no benefit to the buyer. The CARS Act also introduces a mandatory three-day right to cancel a contract for certain used vehicles. The law takes effect in October 2026.

In December 2025, the New York governor signed the FAIR Business Practices Act into law, amending the state’s primary consumer protection law for the first time in 45 years. This law empowers the attorney general to bring civil actions against corporations engaging in unfair or abusive acts and empowers consumers to bring private rights of action concerning deceptive or abusive practices. For auto lenders, the FAIR Business Practices Act’s most direct impact lies in provisions prohibiting junk fees and the steering of borrowers into higher-cost loan products — practices that have historically been applicable to auto financing products.

2025 Enforcement Highlights

CFPB Enters Into Consent Order With Auto Lender Over Improper Credit Reporting Allegations

In January 2025, the CFPB announced that it had entered into a consent order with American Honda Finance Corporation (Honda) resolving allegations of improper credit reporting in violation of the Fair Credit Reporting Act (FCRA) and the Consumer Financial Protection Act (CFPA). Specifically, the CFPB alleged that Honda “furnished inaccurate or incomplete information” to credit reporting agencies for more than 300,000 consumers, failed to investigate disputes in a timely manner, misreported deferred Coronavirus Aid, Relief, and Economic Security Act payments as delinquent, and maintained inadequate policies to ensure reporting accuracy. According to the terms of the consent order, Honda agreed to pay $10.3 million in consumer redress and $2.5 million in civil money penalties.

Alaska Attorney General Settles With Auto Dealerships Over Dealer Fees Not Included in Advertised Prices

In 2025, the Alaska attorney general announced two separate settlements with automobile dealerships (one in January and the other in December), resolving allegations that each dealership unlawfully charged fees not included in advertised vehicle prices in violation of Alaska law. Under the settlements, one dealership agreed to offer refunds in the amount of $220 to each consumer who paid more than the online advertised price, and the other agreed to pay a civil money penalty of $300,000.

CFPB Withdraws Lawsuit Against Subprime Auto Lender

In April 2025, the CFPB withdrew from a 2023 lawsuit it had jointly filed with the New York attorney general (AG) against Credit Acceptance Corporation in the U.S. District Court for the Southern District of New York. In that lawsuit, the CFPB and the New York AG alleged that the lender had engaged in abusive and deceptive acts and practices in violation of the CFPA and New York state law, including misrepresenting loan terms and steering customers toward high-interest loans. New York remains as the sole plaintiff, and the court terminated the lender’s pending motion to dismiss while the parties discuss settlement.

CFPB Terminates Consent Order With Auto Lender and Waives Any Alleged Noncompliance

In May 2025, the CFPB terminated a 2023 consent order it had entered into with Toyota Motor Credit Corporation and waived any alleged noncompliance with the settlement. The CFPB alleged that the auto lender had engaged in unfair or abusive acts and practices in violation of the CFPA and FCRA, including obstructing cancellations, mishandling refunds, and inaccurately reporting accounts as delinquent. According to the terms of the consent order, the auto lender had agreed to pay $48 million to affected consumers and $12 million in civil money penalties toward the CFPB’s victims relief fund.

The FTC Drops Disparate Impact Claims Against Three Texas Auto Dealerships

In August 2025, to comply with an April 2025 executive order directing federal agencies to deprioritize enforcement actions based on disparate-impact theories, the Federal Trade Commission (FTC) withdrew its discrimination claims against three Texas auto dealerships. Although the FTC said it was dropping the discrimination claims out of “an abundance of caution,” it is continuing to pursue the add-on and fee-related allegations against the dealerships.

1. [1] “Junk fee” is a broad term the CFPB has used to describe a wide range of fees financial institutions may charge consumers, ranging from so-called “surprise” overdraft fees to “pay-to-pay” convenience fees. ↩

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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