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July 16, 2012
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Finance Bills Continue to Move Forward By Ted Craig
Rush - Dated Material
The three bills to add regulations for the buy-here, pay-here business in California have moved forward. The separate bills, sponsored by state Sen. Ted Lieu and Assemblymen Mike Feuer and Bob Wieckowski, moved through the judiciary committees of both houses. The bills all passed out of their respective chambers. Each would place various restrictions on dealers’ inhouse finance operations, ranging from a new licensing requirement to banning them from taking payments at their stores. Lieu’s press release on his bill’s advancement created some confusion. His press release states that it caps the interest rate dealers can charge at 17.25 percent. But the bill itself puts the cap at the Federal Funds Rate plus 17 basis points. Today, that would be 17.25 percent. However, that
would change with Fed action. Arkansas once had a similar rule, capping the interest rate on retail installment contracts at the Federal Funds Rate plus 5 basis points. That changed following what Arkansas attorney Lisa Kelly called “one hell of a fight.� Arkansas’ rate now stands at 17 percent, which is below the rate cited in Lieu’s release. The release calls the proposed California rate “the strongest cap in the nation.� Calls to Lieu’s office for clarification on the rate issues went unanswered at press time. All three bills were inspired by a series of articles that appeared in the Los Angeles Times titled “Wheels of Fortune.� The articles, written by Ken Bensinger, depicted buy-here, pay-here as a business in which dealers constantly recycled cars, declaring repossessions as a loss “for tax purposes.� The series recently won the Loeb Award, one of the most prestigious prizes for business journalism. In related news, the state’s FIn related news, the state’s Fair Political Practices Commission recently found Feuer violated ethics rules when he accepted a very expensive plaque from a group of consumer lawyers. According to a press report, Feuer got off with a warning rather than a fine because he paid back the group.
Photo by the Associated Press HITCHHIKING?: A bill by California Sen. Mike Feuer (D-Los Angeles) that would slap restrictions on buy-here, pay-here dealers may force their customers to find other transportation.
Weather Creates Challenges Across Country
Power outages, wildfires and violent storms have made life difficult in many areas, but most dealers and auctions have managed to keep their businesses operating. Lois Keenan, executive director of the Virginia Independent Automobile Dealers Association, said the June 29 power outages in the Mid Atlantic and East Coast regions have been devastating to some homeowners and businesses. But Wanda Lewark, president of Auto Buying Service in Fairfax, Va., said the weather didn’t stop business on June 30. She said the storm hit on a Friday evening, leaving the dealership without power, phone service and Internet. The dealership still opened on Saturday. Lewark said she and her husband were not at the lot that day, but a staff member used his cell phone to call and tell her they had a customer who wanted to purchase a car even though the computers were down. “Well, sharpen your pencils,� she told them. Continued on page 6
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