“Buy Here Pay Here” (BHPH) automobile sales are under attack by a new bill that hopes to regulate business practices of these car dealerships. A recent article in the Los Angeles Times stated that 20% of all used car purchases in the U.S. are financed with BHPH deals. Many of these dealerships are known for high purchase prices, interest rates nearly triple the national average, and aggressive repossession practices. These unregulated loans are known for taking advantage of people with poor credit histories who need a car but can’t get a loan.

Senate Bill 956 contains several important protections that will prevent these dealerships from taking advantage of California consumers. The bill hopes to:

• Impose regulations that requires “Buy Here Pay Here” auto dealerships to obtain a California Finance Lender license.
• Limit loans to a maximum 17 ¼ % interest rate.
• Give consumers an eleven day “grace period” after due payments before the vehicles can be repossessed.
• Require BHPH dealers to provide written notices to their customers informing them of their legal rights.

The Bill is expected to be reviewed within the next month.