Significant reforms in the Buy Here, Pay Here car loan industry are set to go into effect next January, after Governor Brown’s signature of Assemblymember Chris Holden’s bill to protect the used-car-buying public.
“By signing AB 265 the Governor recognized the State of California needed to do more to reign in abusive consumer lending practices at Buy Here, Pay Here car dealerships,” said Assemblymember Holden. “Given all of the challenges and worries facing hard working families in our state, I am proud that AB 265 will provide car-buying consumers the flexibility they need to make their payments on time, keep their cars and continue to provide for their family.”
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 bill also increases penalties for violations of these laws.
Many of these used car dealers target low-income workers with poor credit. They are the lenders of last resort for many working class Californians, but the cost for this kind of credit is steep with exorbitant interest rates and can be a vicious cycle for poor workers who need a car.
AB 265 goes into effect January 1, 2016.
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