Mexico's Senate Approves Used Vehicle Financing Inclusion

In a unanimous decision with 92 votes, Mexico’s Senate approved the amendment to Article 63 of the Federal Consumer Protection Law, incorporating used vehicles into financing plans. The proposal, presented by Senator Rafael Espino, seeks to provide legal certainty to consumers, offering detailed information on costs, interest rates, terms, and vehicle conditions during transactions.

Additionally, this action reduces the risk of fraud and provides financial or legal guarantees previously lacking in this sector. The amendment eliminates the explicit reference to the acquisition of "new" goods, allowing semi-new vehicles to be subject to financing.

"The financing systems involving consumer groups contributing periodically for management by a third party can only operate for the acquisition of specific movable or immovable property designated for residence or commercial use, as stipulated by the respective regulations, and can only be implemented with prior authorization from the Ministry of Economy," states the modified and approved paragraph.

The paragraph specifying the duration of financing systems, previously capped at 5 years for movable property and fifteen for immovable property, has been revised. The new wording indicates that these durations will be determined by the respective regulations and with prior authorization from the Ministry of Economy.

Gloria Núñez, President, Consumer Defense Commission, declared the goal of expanding consumer options in goods acquisition. She noted that the Mexican semi-used vehicle market involves the sale of 5.5 million units annually, with only 5% conducted by dealers.

"One year before the pandemic and at the beginning of the current federal administration, the Mexican market placed six million semi-used vehicles, describing the business potential and, consequently, the need to update its regulation in favor of safety and public interest," the decree states.

With this reform, the automotive market is expected to grow by up to 40%, thanks to the introduction of new financing schemes. This provides an opportunity for individuals lacking the financial capacity to purchase a semi-used vehicle. Additionally, this measure is anticipated to generate increased revenue, as companies offering this option must fulfill their fiscal obligations and issue digital receipts with all the required information by the Ministry of Finance and Public Credit (SHCP).