Assembly Majority Leader Holden Introduces Bill To Protect Used Car Buyers At “Buy Here, Pay Here” Lots (AB 265)

Tuesday, February 10, 2015

Sacramento – There is a growing segment of the used car market that targets those with poor credit.  It’s called “Buy Here, Pay Here” and it appeals to those who can’t get a car anywhere else because they don’t have the cash or the credit. These are the lenders of last resort for many Californians. But the cost for this kind of credit is steep with exorbitant interest rates and can be a vicious cycle for poor workers who need a car.

Assemblymember Chris Holden (D-Pasadena) has introduced a measure (AB 265) to give these car buyers some added protection by requiring buy-here/pay-here dealerships to provide a 30-day written notice before using a starter-interruption device which essentially disables the vehicle. Current law requires only a 48 hour warning for repossession due to late payments, or insurance cancellation or even a clerical error – and the consequences can be disastrous.

“Collections are really the focus of these businesses,” explained Assemblymember Holden. “If you’re late or can’t make a payment, you’re liable to lose your car. This is a highly profitable business that depends on defaults and repossessions. The cars come with these remote-controlled ignition blockers that make repossessing the cars easier. We want to give these customers some breathing room – in this case, 30 days – so that they can catch up with their payments, discover any errors and keep the wheels on the road.”

According to the National Alliance of Buy Here, Pay Here Dealers, the average dealer sold 610 cars in 2013 with an average profit of more than $4500. There are more than 33,000 dealerships across the country.