VADA’s Don Hall Discusses the Latest Changes to the Military Lending Act

Military Lending Act

In this segment, we are pleased to welcome back Don Hall, president and CEO of VADA, or the Virginia Automobile Dealer Association, who discusses the Department of Defense’s important ruling on the Military Lending Act.

Military Lending ActVIDEO TRANSCRIPT: 

Today, we’re joined by Don Hall, who is the president and CEO of the VADA, Virginia Auto Dealers Association. And we want to bring him in and talk to him a little bit about this new program, or this new Act I should say, that has just been put into place, which is the Military Lending Act. Welcome to the show, Don. Talk to us about this.

Don Hall: Yeah, thank you, Jim. Actually, the Act has been in place for a little over two years. What happened was the Department of Defense made the decision that in military areas we could not sell gap insurance in the dealerships, we couldn’t sell credit life and/or service agreements in many cases as well. So this was a very difficult period of time for any dealers nationwide located in any military markets. Because you can not only sell it to them, but you couldn’t sell to their dependents either. It was a very unfortunate Act that took place. NADA, to its credit, we were involved in its association early on as well. NADA fought hard, and finally, after two-plus years, finally the Department of Defense issued an order yesterday now allowing us to be able to go back to selling gap insurance, service contracts, and credit life.

Jim Fitzpatrick: Wow, that’s fantastic. And what would have led to putting something like that in place and put a moratorium on that?

Don Hall: Jim, I’ve had the privilege of working for these dealers for a long time, and one thing I’ve learned over the years is be careful of bureaucrats. Bureaucrats who oftentimes have axes to grind against different industries and/or have lack of understanding. And so a bureaucrat was placed in the Department of Defense to deal with this issue. This particular bureaucrat had a history of being anti auto industry, so convinced members of the Department of Defense that we were taking advantage of the military.

Don Hall: Look, let me say this to you very clearly. I served in the United States Marine Corps. I served for six years back in the early seventies I love the Marine Corps. I’m involved in boards, have been for all my life, involved in various Marine Corps functions and so forth. At the end of the day, I care deeply about our service people, our men and women in uniform and their sacrifices. But the fact the matter is when the Department of Defense made the decision that we could not sell these products, you were disadvantaged in the military and the people that were making those decisions made three and four times the amount of money that the typical Sergeant in the Marine Corps would have made or Corporal or whatever else, or even young second Lieutenant in the Army.

Don Hall: And so at the end of the day, they hurt the military folks because the fact is there is a gap oftentimes when a car is really damaged and you’ve got to pay off a loan. There are plans to buy service contracts or credit life. People need to have that option and to make that decision on their own. So that was taken away. Now having said that, Jim, this will be hard for your viewers to hear. As a former F&I manager I did that long ago, I will tell you that at the end of the day, part of the problem is our fault and that is we don’t oftentimes disclose properly and make sure that people understand what they’re buying and the benefit of what they’re buying. And then we play games the way we mark it up. One dealership, you can buy a product for this price, another dealership for another price, and you ask why?

Don Hall: Well, one, because the banks that they pay more for it or I because I could, I could put it in there and the individual didn’t balk on the price and so they bought it. Ladies and gentlemen, that’s got to stop. We have to have pricing that’s fair and make sure that those young military, and any consumer gets a good return, a good, fair value, but what you are selling to them in that F&I operation. So, thank goodness the Department of Defense, and I knew many people at the Department of Defense finally said, thank goodness that the NADA did a marvelous job on this and they came back and finally said, as of yesterday, you can go back to selling it.

Don Hall: The worst was we’re all holding our breath, was the Department of Defense could have ruled against us and then on top of that, the consumer protection folks would have jumped on that train and before you know it we lost our entire F&I. Ladies and gentlemen, make sure that when we sell products that are clearly disclosed, make sure consumers understand it and here’s a novel idea. Maybe we ought not to pay our people commissions on the upside department the way we do today, because oftentimes it incentivizes them at all costs and sell whatever they possibly can. If you’re in the business longterm and it matters to you, then you ought to make sure that we’re treating people very fair. That’s how we keep disruptors out of our business. That’s how we have a future in our business by taking care of our consumers.

Jim Fitzpatrick: Yeah, that’s for sure. That’s a huge deal though. I mean, and I agree with you because you are doing a disservice to these military families that can’t have an extended service contract or what have you. I mean, it really is, that was a bad move to begin with for sure. So kudos to NADA for working on this and winning this back for dealers, right?

Don Hall: Amen. Again, I couldn’t say enough good things, Peter Welch has done a marvelous job in leading them down this path with his staff. And thank you. They’ve saved my Virginia dealers and many other States who have the privilege of having large military installations located in their state. God bless our troops, their commitments, their families who suffer mightily as result of those commitments, and we ought to make sure that they have the same freedom of choice that anyone else has. But the caveat that we make sure that they’re buying something that makes sense, we disclose it properly. If they understand what they’ve just purchased.

Jim Fitzpatrick: At the core, that’s what they’re fighting for, right? The freedom of choice.

Don Hall: Well, I love that term, at the core, the United States Marine Corps. Yes. That is a choice. And that’s what they are fighting for. So let’s make sure that we don’t take advantage and act like we are superior because we’re the F&I managers or the sales manager of the dealership. Let’s make sure customers have a great experience.

Jim Fitzpatrick: That’s right. Well, Don Hall, president and CEO of VADA, Virginia Auto Dealers Association. Thank you so much for joining us today to talk about this very important topic. And as I said, I look forward to our next time together because it’s always a pleasure having you on the show and your content is always so enlightening. So thank you.

CBT Automotive Network, the number one most-watched network in retail automotive. This has been a JBF Business Media Production.