Anyone who has ever bought a car and had the purchase financed by a dealership knows what a sweaty-palm experience it can be.

Even the savviest of consumers are likely to blanch after the credit manager runs all the numbers and comes up with a payment that seems way higher than anticipated. And what about all those extra costs? Are they really legit?

It's these concerns and more that are the impetus behind several groups' opposition to an auto-dealer exemption from legislation being fashioned by Congress to create a new consumer watchdog agency. Members of the House Financial Services Committee are expected to vote on the legislation Thursday.
Most dealership profits come from new- and used-car dealerships' financial and insurance departments -- not from the sales of the cars themselves, says the group of more than three dozen consumer and civil rights organizations.

Current auto dealer practices are rife with abuse, the group says. Among the shady practices they highlight are those such as bait-and-switch financing, falsification of credit applications and "loan packing" -- deceptive sales of overpriced add-on items, which may include features as mundane as paint stripes -- as well as charging excessive interest rates or dealer markup.

Many of the scams closely parallel the abuses and predatory practices that led to the mortgage meltdown, the group says.

The nation's 20,000 auto dealers are fighting back. Their chief lobbying group, the National Automobile Dealers Association, says auto lending is already regulated by the 50 states, the Federal Reserve and the Federal Trade Commission. Further, it says, auto-related complaints amounted to just 1% of FTC complaints last year.

NADA is encouraging its members to back an amendment by Rep. John Campbell, R-Calif., a former auto dealer, to exempt dealers from oversight of the new watchdog agency.

The NADA also sent a letter to Rep. Barney Frank, D-Mass., chairman of the House committee, arguing against automotive financing being included in the reform bill, which seeks to protect consumers from overzealous lenders.