Senate sends to governor Sen. Ted W. Lieu bill to protect against ‘buy here, pay here’ dealers
Used-car buyers would have greater protections
SACRAMENTO – Milestone protections for used-car buyers moved closer to the finish line today after the Senate approved and sent to Gov. Brown a plan by Sen. Ted W. Lieu to crack down on predatory dealers.
“Senate Bill 956 seeks to regulate so-called ‘buy here, pay here’ used-car ‘loan sharks’ who charge up to 30-percent interest,” Lieu, D-Torrance, said after the 23-14 vote. “Many of these dealers take advantage of our lack of laws to prey on desperate workers, low-income families and members of the military by pushing unregulated loans to sell cars for far beyond market value.”
Lieu’s measure has three main goals:
• Impose first-ever regulations on dealers offering buy here, pay here installment loans by requiring them to obtain a California Finance Lender’s license, which would provide consumers with an array of protections.
• Limit used-car installment loans to no more than 17-percent interest, plus a variable interest rate, which today is .25 percent. This would give California the strongest cap in the nation.
• Change the way buy here, pay here used-car dealers are able to repossess vehicles to include grace periods and make it easier for buyers to reinstate a repossessed car.
Under current law, used-car dealers offering buy here, pay here loans are exempt from many of the protections that apply to other areas of finance.
“Without the protections promised by SB 956, consumers are paying the price – often an exorbitant price.”
Lieu said documented abuses, as outlined in a recent investigation by the Los Angeles Times, include consumers ultimately paying thousands more for a car than it is worth while paying sky-high interest rates. Some dealers markup aging cars bought at auction more than 200 percent, mislead customers in order to repossess cars, and resell the same vehicle as many as eight times. Some dealers aggressively push for the consumer to default on the loan so that they can quickly repossess the car, keep the down payment, and resell the same car again, and again.
The governor has until Sept. 30 to sign, veto or allow the bill to take effect Jan. 1, 2012 without his signature.
For more, including additional background, a Fact Sheet on SB 956 and recent editorials by the Los Angeles Times and Sacramento Bee endorsing the measure, visit Lieu’s Web site at the address below or contact Lieu’s office.
Ted W. Lieu chairs the Senate Labor Committee and represents nearly 1 million residents of Senate District 28, which includes the cities of Carson, El Segundo, Hermosa Beach, Lomita, Manhattan Beach, Redondo Beach and Torrance, as well as portions of Long Beach, Los Angeles and San Pedro. For more, visit www.senate.ca.gov/lieu
