Deal Pack Blog
New California Law for Dealers
Just recently I brought on board a few California customers, and even though this law started at the beginning of the year these dealers had no clue of these laws that took effect as of January 1st 2013.
“Buy-Here-Pay-Here” Car Dealers. Two new laws are directed at used car dealers that assign less than 90 percent of their conditional sales and lease contracts to third party lenders; and therefore provide direct financing to car buyers. One of the new laws defines these used car dealers as “buy-here-pay-here” dealers.
AB 1447 further prohibits these dealers from requiring buyers to make payments in person, except for the down payment, and limits the circumstances under which “buy-here-pay-here” dealers may track a vehicle using electronic tracking technology (GPS tracking). “Buy-here-pay-here” used car dealers will not be allowed to disable a vehicle with starter interrupt technology without first notifying the buyer in writing at the time of sale. In addition, “buy-here-pay here” used car dealers will be required to provide a 30-day or 1,000 mile warranty as part of any purchase or lease of a used vehicle. (AB 1447/Feuer)
AB 1534 requires “buy-here-pay-here” used car dealers to affix and prominently display a label on any used vehicle offered for retail sale that provides the reasonable market value of the vehicle. The label must contain specific information from a recognized pricing guide used to determine that value and the date the value was determined. The prospective purchaser must also be provided with a copy of the information that the dealer used to determine the vehicle’s value. (AB 1534/Wieckowski)
Buy-Here-Pay-Here(BHPH) tends to be over 36% of financing per NIADA report in 2012. BHPH financing accounts for a significantly higher percentage of loans at independent dealers compared to any other types of financing. Banks finance 17.16%, credit unions 16.79%, finance companies 23.02% and 6.52% per NIADA 2012 Used Car report.