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California’s “Buy Here Pay Here” Used Car Industry Could Face New Regulations

Aired 8/2/12 on KPBS News.

The controversial “Buy Here, Pay Here” used car industry would face strict new regulations under several bills moving through the California legislature.

Search "Buy Here, Pay Here" on Google and the first website that pops up is "" Dealers require buyers to make each month's loan payment in person. If they can't, their cars are often repossessed on the spot. Democratic State Senator Ted Lieu said his bill would apply similar regulations for typical auto lenders to the Buy Here, Pay Here industry.

"They have a very different business model. They want you to fail. They actually want you to default on your loan so they can take back the car and then re-sell it. That's why they have an astronomical default rate of twenty-five to thirty-three percent," explained Lieu.

Other bills at the Capitol would require dealers to post a car's reasonable market price, and prohibit them from using GPS and ignition-override technology to disable vehicles whose owners are late on payments. The Buy Here, Pay Here industry opposes the measures, which will come up for final votes later this summer.

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Avatar for user 'PeterSalinas'

PeterSalinas | August 7, 2012 at 9:02 a.m. ― 4 years, 7 months ago

Dear Sir,

The information provided in this short piece, including comments from Sen. Lieu, are inaccurate and, even if it were opinion, unsubstantiated by the facts. The lack of any semblance of information in the form of data, statistics or even anecdotes to support the accusations in this piece point to a lack of journalistic professionalism. You should take this off your Web site. Should an editor from KPBS want to step up and do a balanced and insightful piece, I am available to provide a wealth of information about this legal and balanced industry. (You have my e-mail address.)

Please keep the following in mind: Recent news stories such as this have appeared that state that, we, buy here-pay here dealers charge high prices with hefty finance charges because we want to encourage loan defaults (aka repossessions). Nothing, let me repeat that, nothing, could be further from the truth.
The high charge-off rates (No. 1 expense in most dealerships) create the need for higher prices and not the other way around. The interest rates charged reflects not only the inherent high risk, but the dealer’s cost of funds which are significantly higher than banks who borrow capital at close to zero percent. Each state has also defined maximum interest rates (with few exceptions) and dealers comply with those laws as well. I am quite certain that there are situations where a dealer has sold a particular vehicle several times but it is NOT because they want to, it’s because it came back several times. The reason it came back is that the customer failed to live up to the contract and make their payments.

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