Assembly Approves Feuer Law to Protect from Questionable Auto Loans

The Assembly has approved legislation by Assembly Member Mike Feuer (D-Los Angeles) to rein in abusive practices of the “Buy Here, Pay Here” car loan industry.  AB 1447 increases transparency of vehicle sales prices, encourages sellers to make fair deals with buyers, and protects buyers from harassment and invasions of privacy.

“Without the protections included in AB 1447, mostly low-income Buy-Here-Pay-Here customers can’t be sure they are buying dependable vehicles,” said Feuer.  “That’s why my bill requires a minimum warranty and other critical safeguards that help ensure buyers are paying for reliable transportation.”

AB 1447 would:

• Require Buy-Here-Pay-Here dealers to provide a limited warranty that covers most major components and lasts for at least 30 days or 1,000 miles.
• Prohibit Buy-Here-Pay-Here dealers from requiring a buyer to make regular payments in person.
• Require that Buy-Here-Pay-Here dealers receive written consent from the buyer prior to selling a vehicle with an electronic tracking device.
• Require Buy-Here-Pay-Here dealers to provide notice to the buyer of the presence of ignition shutdown technology in the vehicle and that such technology be set to provide advance warnings to the driver, to help avoid stranding drivers.

“Buy Here, Pay Here” auto sales are one of the few means of accessing transportation for consumers who cannot qualify for conventional auto loans because of poor credit or low-paying jobs.  As reported in a 3-part series by the Los Angeles Times in late 2011, many individuals agree to burdensome loans because they need cars to get to work and stay employed.  But many buyers find themselves unable to pay inflated loans, ending up deeper in debt.  And such sellers have little incentive to ensure that loans are paid back, as they can easily repossess cars and re-sell them to new buyers.

The bill will next be heard in a Senate policy committee.

Assembly Member Feuer’s website:  http://www.assembly.ca.gov/a42

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