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 1^st 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.