1. Legislation would slam brakes on car
dealers, opponents say
By: Jim Skeen
PALMDALE - A fight is brewing over legislation that advocates say will protect
consumers from unscrupulous "buy here, pay here" used car dealers, but opponents say it
will take hundreds of millions of dollars out of California and city coffers and push
people out of their cars and onto bus benches.
A statewide coalition, which originated in the Antelope Valley, is starting an
informational campaign to oppose the passage of Senate Bill 956 and Assembly bills
1543 and 1446, which coalition members say will cut off financing for people with no
credit or bad credit who are trying to buy cars.
"They will hurt the consumer," said Gus Camacho, owner of Camacho Auto Sales, which
has sites in Lancaster and Palmdale. "These people won't be able to get to work."
If enacted into law, the legislation would cut his sales on the cars his company finances
by 25% to 50%, Camacho said. He said he started around 2000 studying how to provide
his own financing to customers, including those who have had credit troubles. When the
recession hit, lenders started tightening up their lending practices, including making it
extremely difficult for people trying to get car loans, Camacho said.
"We started opening the gates on the financing side of the business," Camacho said.
"These are good people who have gone through tough times. We're able to help them get
a vehicle and start rebuilding their credit rating."
The coalition, called the "Coalition to Protect Our Freedom to Drive," includes the
Antelope Valley Board of Trade, the Antelope Valley Hispanic Chamber of Commerce,
the Lancaster and Rosamond chambers of commerce, state Board of Equalization

2. member George Runner and Palmdale Councilman Tom Lackey. Among the other
members are the National Independent Automobile Dealers Association, the Independent
Automobile Dealers Association of California, the National Alliance of Buy Here, Pay
Here Dealers, and the Community Auto Finance Association.
Supporters of the bills include the California Immigrant Policy Center, the Center for
Responsible Lending, the Consumer Attorneys of California, the Consumer Federation of
California, and Consumers for Auto Reliability and Safety.
All three bills have passed floor votes in their respective houses of origin and are
awaiting committee assignments.
The bills were triggered by controversy stemming from reports of abuses in the "buy
here, pay here" industry. Car dealers were charging high interest rates, in some cases
more than 30%, and repossessed vehicles when the consumers couldn't make payments.
In one case, a dealership in Hawthorne had reportedly sold more than 130 vehicles at
least three times each since July 2008.
"Some of California's hardest-working residents are being exploited simply because they
desperately need a car to get to work or to drive their family to school or to the doctor,"
said state Sen. Ted Lieu, D-Torrance, the author of SB 956. "Unscrupulous dealers are
pushing these types of previously unregulated loans to sell cars for far beyond market
value, at interest rates as high as 30%. They need to either find a conscience or display a
sign: Rip-offs 'R' Us."
Lieu's bill has three goals:
Impose first-ever regulations on dealers offering buy here, pay here installment loans by
requiring them to obtain California Finance Lender's licenses, which would provide
consumers with an array of protections.
Limit used-car installment loans to a maximum 17.25% interest, which would give
California the strongest cap in the nation.
Change the way buy here, pay here used car dealers are able to repossess vehicles to
include grace periods and make it easier for buyers to redeem a repossessed car.
Auto dealers said the risks inherent in their business are high. When a buyer defaults, the
car must be repossessed, if it can be found, then restored to saleable condition, if it hasn't
been beaten up too badly. Dealers must also give customers the opportunity to redeem
their vehicles, before the cars can be resold.
Members of the coalition said the bills were a "knee-jerk reaction" to reports that
identified only two dealerships with abuses out of an industry of 9,000 dealerships. Other
dealerships cited in the reports were outside California.

3. While Lieu's bill and the other two bills are well intended, they have disastrous
consequences, opponents say.
The coalition said its analysis of the bills indicates the state would lose between $234
million and $374 million annually in sales tax revenue.
If the bills pass, the coalition said that in some cases dealers would go out of business,
and in other instances, dealers said they would no longer be able to finance buyers with
less than perfect credit.
"These three bills, if passed and signed by Governor Brown, will bring harm to the very
people the bills purport to help," the coalition said in a statement announcing their
information campaign. "This legislation will also substantially reduce sales tax revenue
for public safety in our cities and counties at the worst possible time, and also worsen our
state's $16 billion budget deficit."
AB 1447, authored by Assemblyman Mike Feuer, D-West Hollywood, would require
sellers to provide a 30-day, 1,000-mile warranty and prohibit buy here, pay here dealers
from using references obtained from customers for collection purposes.
Those provisions would add licensing and servicing costs, opponents say. According to
California law, dealers may not offer warranties unless approved by the Department of
Insurance, and they must meet the minimum liquidity and loss reserve requirements to
cover mass losses and claims.
The cost for a service contract would range from $150 to $250 or more, coalition
members said.
AB 1534, authored by Assemblyman Bob Wieckowski, D-Fremont, would require
dealers to label every car with its "reasonable market value."
Coalition members said "reasonable market value" is a vague term at best and does not
take into account the differences between cars of similar make, model and year but
different conditions. Coalition members called it "a disservice to consumers placing an
equal value on two very different automobiles."
jskeen@avpress.com