Assembly Majority Leader Holden’s Bill To Protect Used Car Buyers Clears Its First Senate Hurdle

Wednesday, June 17, 2015

Sacramento – Assemblymember Chris Holden’s (D-Pasadena) bill to regulate Buy Here, Pay Here car lots has been approved in the Senate Judiciary Committee.

Under AB 265, Buy Here, Pay Here dealerships must provide a 5 to 10-day notification period before a remote kill device can be used to disable a car for lack of payment. Current law requires only a 48 hour warning before a car can be disabled due to late payments, or insurance cancellation or even a clerical error. The consequences can be disastrous.

“This bill will help thousands of working class Californians by giving them several extra days to make their car payment or clear up any kind of misunderstanding before their car is disabled,” explained Assemblymember Holden. “It is now clear that 48 hours simply is not sufficient notice for auto buyers, many working two or more jobs, to understand why a payment is late and find the payments to keep themselves in their cars.”

Buy Here, Pay Here auto dealers are those who keep over 90% of their auto loans “in-house” as opposed to traditional dealerships that sell the majority of their loans within days. Keeping the loans allows Buy Here, Pay Here lots to avoid most lending guidelines, opening up vehicle sales to people with poor credit. To ensure payments, dealerships began installing “starter interrupt devices” on cars, allowing a dealership to remotely disable a vehicle if a payment wasn’t made.

Assembly Bill 265 reflects an agreement between consumer groups, industry, local governments and law enforcement.