Last week a court-ruling shook the car industry forcing major brands to hit the breaks on sales (which caused quite a stir in the auto-finance world)
Honda and BMW stopped delivering cars to buyers after judges said the way dealers got paid wasnt legal: this ruling changed everything that car-sellers did for many years. Both companies started selling again but with different rules.
The whole mess started when the Court of Appeals said that hidden fees in car-loans are against the law — this was a huge shock because everyone thought these deals were fine before. The ruling made banks car-makers and dealers super-worried about whats coming next
This could be a potential market failure situation. You would be looking at a situation where no one would want to provide car finance – or be able to
Legal experts think this might be a big-time problem; Darren Smith from Courmacs Legal says there could be like 30-40 million claims. His company already has 1.4 million people ready to ask for their money back. The math is simple: if you bought a car with a finance deal in the last 20 years you might get some cash back
- Car dealers must now tell buyers about all fees
- Many finance companies stopped making new deals
- Some dealers changed their payment systems
- Banks are worried about possible law-suits
The Supreme Court might look at this case again but theres only a small chance theyll change anything. Right now car-sellers are trying to find new ways to work with these rules — its either adapt or face big problems