Wells Fargo is tapping the brakes on its auto loan business, CNBC has learned exclusively.
The bank, one of the biggest lenders for new and used car purchases in the U.S., sent letters to hundreds of independent auto dealerships last month telling them that the San Francisco-based company was dropping them as a customer, according to people with knowledge of the situation.
A Wells Fargo spokeswoman confirmed that the bank, which only makes auto loans through car dealerships, will no longer accept loan applications from most independent shops. Independent dealerships typically sell used cars, unlike franchise dealerships that focus on new vehicles from specific manufacturers.
The bank had “an obligation to review our business practices in light of the economic uncertainty presented by COVID-19 and have let the majority of our independent dealer customers know that we will suspend accepting applications from them,” Natalie Brown, the spokeswoman, said in an email. “The independent dealers we will continue doing business with are those with deep, long-standing relationships with Wells Fargo.”
The move follows Wells Fargo’s retrenchment from parts of the mortgage market as the coronavirus pandemic took hold in the U.S. The bank is operating under a dozen consent orders tied to its 2016 fake accounts scandal, and one of those orders, from the Federal Reserve, limits the bank’s ability to grow its balance sheet until it fixes compliance shortcomings. – READ MORE
Listen to the insightful Thomas Paine Podcast Below --