MONTGOMERY — A bill pre-filed for the 2020 legislative session would require car dealerships to tell buyers about any portion of the finance charges the dealer receives from the lender for arranging the loan.

House Bill 10 is sponsored by Rep. Becky Nordgren, R-Gadsden, and states the car dealer would have to disclose upfront “interest rate add-ons” in the loan.

The bill defines those add-ons as the amount of the finance charge or other compensation received by the dealership when it acts as an agent of a financial institution.

“They have the ability to do that and the law isn’t prohibiting them from doing that, this bill is just saying that when you do that you have to disclose it to the buyer,” Nordgren told Alabama Daily News.

Thomas Dart, president of the Automobile Dealers Association of Alabama, compared the proposed legislation to mandating that grocery stores disclose to shoppers how much they pay wholesale for a gallon of milk compared to the retail price charged to customers.

“We would be opposed to it in its current form,” Dart said about the bill.

He said banks like dealerships to arrange loans for them because it saves the financial institutions time. Dealerships are compensated for doing so.

Nordgren said she has heard from multiple people over the years who said they were caught off guard when they later figured out the add-ons.

She said HB 10 is a simple consumer protection bill that is trying to allow the buyer to be able to shop around for their best option and not get stuck with a surprise fee.

“To me, all the bill is doing is making them disclose that to them so that consumer(s) can consider other options and look at other dealerships,” Nordgren said. “It’s just going to allow the consumer to get the final decision on whether they agree to an add on to the interest rate or not.”

Dart said dealerships often send a consumer’s information to multiple lenders and get the best rate for consumers.

And people aren’t required to get their loans through the dealership, Dart said.

Nordgren said she’s received some phone calls from people who have concerns about the bill and plans on working with them until the legislative session starts Feb. 4.

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