The National Independent Automobile Dealers Association (“NIADA”) expressed its concerns with Connecticut Senate Bill 272 (SB 272) in a letter to the Joint Banking Committee. SB 272 would create a new set of disclosures that commercial lenders would be required to provide borrowers at the time credit is initially offered.
“NIADA strongly urges the Joint Banking Committee to consider our objections to SB 272. This legislation would create additional disclosures that would impact the ability for our members to effectively run their business. These additional requirements are likely to be confusing or outright misleading to borrowers,” said Bob Voltmann, Chief Executive Officer, NIADA.
Independent automobile dealers engage with floorplan lenders to finance their inventory. The ability to purchase vehicles requires a significant capital and dealers either do not have the funds on hand to purchase these cars or do not wish to tie up their working capital in inventory, which can take months to sell.
NIADA is concerned that SB 272, as currently drafted, does not adequately consider floorplan lending, and as a result, could inject unnecessary confusion and potential liability into standard transactions that are already well-understood by both sophisticated business parties and increase the cost of or reduce availability of commercial credit for Connecticut automobile dealers. In addition, the bill could also create the inefficient result of providing separate disclosures for each individual vehicle on a dealer’s lot, which would lead to a significant compliance burden for lenders and limited additional protection for an automobile dealer overwhelmed with disclosures.
NIADA looks forward to working with the Joint Banking Committee to introduce legislation that supports independent automobile dealers.