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TORRANCE DAILY BREEZE: State Senate committee approves Lieu bill regulation car dealer loans
April 19, 2012
By Art Marroquin
The state Senate's Banking and Financial Institutions Committee on Wednesday approved a South Bay lawmaker's bill aimed at regulating car dealers who offer "buy here, pay here" installment loans.
Senate Bill 956, introduced by state Sen. Ted Lieu, D-Redondo Beach, would require dealers to obtain a state lender's license so consumers are better protected when purchasing vehicles.
In some cases, consumers pay thousands of dollars more for a vehicle than it's worth while also paying high interest rates, Lieu said. The move sometimes leads to repossession, while the dealer keeps the down payment and resells the same vehicle.
The measure also would limit used-car installment loans to a maximum of 17.2 percent interest. The bill also calls for providing grace periods before a used car is repossessed.
"As it now stands, used car dealers offering these `buy here, pay here' loans are exempt from many of the protections that apply to other areas of finance," Lieu said. "Without these protections, consumers are paying the price - often an exorbitant price."
The measure will be reviewed next week by the Senate Judiciary Committee.