BB&T Dealer Finance halts markups


For franchised and independent dealerships that use BB&T Dealer Finance, a segment of BB&T Dealer Financial Services, flat-fee compensation is coming your way.

On Thursday, the commercial bank announced the launch of what it dubbed “a nondiscretionary dealer compensation program, providing a competitive automobile financing program that eliminates pricing discretion in the consumer transaction.”

Officials indicated the dealerships using BB&T for consumer financing will no longer allow for dealer markup on retail installment sales contracts. BB&T Dealer Finance will instead offer a flat-fee dealer compensation program.

The program changes will go into effect on July 1.

In a message to SubPrime Auto Finance News, BB&T corporate communications strategist Brian Davis noted there were 3,903 active dealers using the bank’s platform as of May 31.

Davis also mentioned the policy change does not impact Regional Acceptance Corp., the division of BB&T Dealer Financial Services that specializes in subprime financing. He noted Regional Acceptance already prohibited dealer markup.

According to the company’s latest financial statement, BB&T Dealer Financial Services’ net income was $43 million for the first quarter of this year, an increase of $8 million above the earlier quarter. Segment net interest income increased $11 million, primarily driven by growth in the Dealer Finance and Regional Acceptance loan portfolios and the inclusion of dealer floor plan loans in the segment during the current quarter. The allocated provision for credit losses decreased $9 million, primarily due to lower charge-offs related to the non-prime automobile loan portfolio.

The decision by BB&T comes on the heels of the Consumer Financial Protection Bureau finalizing its rule governing “larger participants” in auto financing.

“We are committed to the fair and equal treatment of all consumers," BB&T Dealer Financial Services manager Derek Lane said in a statement.

“The automobile finance industry provides a valuable service, and we highly value our long-standing dealer relationships,” Lane continued. “This new program will strengthen the process long-term for both consumers and our dealer clients."