Reporting Ed Mertz
LOS ANGELES (KNX 1070) — State Senator Ted Lieu of Torrance has introduced a bill in Sacramento aimed at regulating the so-called Buy Here Pay Here auto dealerships.
“Well we know they’re definitely gouging consumers and going after the poor. But we don’t know how big the problem is because they don’t have to get licensed,” said Lieu.
The measure, which would give buyers protections, is expected to be considered by a Senate committee in about a month.
If approved, the bill would — among other things — cap the interest rates the dealers charge which often top 30 percent.
The dealers say interest rates are high because of the high risk of their customers. But Lieu says the dealers boost interest rates to make the payments difficult.
“And then they hope the consumers default on the car so they can repossess it, take it back and then resell it to another consumer. And they’ve done this sometimes nine, eight times for a single car in a very short period of time,” he said.
Meantime, the new consumer federal protection bureau says it too is looking into the practices of the Buy Here Pay Here auto dealerships.