Buy Here Pay Here used-car lots may soon find themselves under new regulation in California. The proposed legislation, SB 956, aims to stop the practice of what some are calling predatory lending that occurs each time these dealers finance car purchases through the offering of payment plans.
While introducing the bill on January 9, State Senator Ted Lieu (D-Torrance) said, “What Buy Here Pay Here dealers are doing is in fact a form of lending. They’ve been able to fly under the radar and not comply with lending laws.”
Opponents to the lending that is done by these used-car salespeople say that consumers are often charged up to triple the value of cars and asked to pay interest rates that can be more than 30% per annum. If the bill passes, which is likely in California, the buy here pay here car lots in question will be forced to file annual reports to the Department of Corporations and pay annual license fees of amounts that have yet to be determined.