WASHINGTON, D.C. -

National Automobile Dealers Association members are gathering on Capitol Hill this week to urge Congressional lawmakers to pass bipartisan legislation that franchised dealers say would nullify the Consumer Financial Protection Bureau’s “flawed” guidance on auto lending.

NADA explained H.R. 5403 — the Stutzman-Perlmutter Bill — also would require more transparency and accountability from the CFPB on future guidance. The proposed bill arrived in the U.S. House on Monday, 10 days before the bureau is scheduled to conduct another auto finance field hearing.

“The CFPB’s actions will likely raise the cost of credit for car buyers,” NADA chairman Forrest McConnell said. “The CFPB is attempting to change the $905 billion auto loan market and limit market competition without prior public comment and without analyzing the impact of its guidance on consumers.”

The new bill, also titled “Reforming CFPB Indirect Auto Financing Guidance Act,” would allow CFPB to reissue its guidance under a more transparent process. The measure is sponsored by Rep. Marlin Stutzman, a Republican from Indiana, and Rep. Ed Perlmutter, a Democrat from Colorado.

NADA pointed out this new bill is a narrower version of H.R. 4811, which was reported out of the House Financial Services Committee by a bipartisan vote of 35-24 in June.

“A majority of car buyers choose to finance their purchases through indirect financing at dealerships, which is always optional,” said McConnell, a Honda and Acura dealer from Montgomery, Ala. “Dealers often discount these interest rates to earn their customers’ business.”

In March of last year, NADA recapped that the CFPB issued guidance that threatens to eliminate the flexibility of dealerships to discount the interest rate offered to consumers to finance vehicle purchases.

The association said the CFPB claims that negotiated interest rates between dealers and their customers create a significant risk of unintentional “disparate impact” discrimination. However, McConnell insisted there are a variety of legitimate business-related factors that can affect finance rates, such as beating a competing rate.

"H.R. 5403 is needed because it requires the CFPB to follow a transparent process when issuing auto finance guidance," McConnell said. "The bill would rescind the 2013 auto finance guidance and require public participation for future guidance before it is issued."

NADA is urging dealers to contact their House members today to cosponsor H.R. 5403. To locate your House member, click here. For the issue brief on H.R. 5403, click here