In a five-to-two vote, The Senate Banking and Financial Institution Committee approved Senate Bill 956.
Introduced by Senator Ted Lieu (D-Torrance) in response to a series of article written by L.A. Times reporter Ken Bensinger, the BHPH legislation now moves on to the Senate Judiciary Committee on April 24, 2012.
If passed, the bill will set a cap on auto loan interest rates of 17.25%. Currently lenders can legally charge buyers up to 30%.
Articles written by Mr. Bensinger for the L.A. Times highlighted the fact that BHPH dealers have been proven to provide inaccurate and erroneous interest rate information for borrowers that directly affects their monthly payments.
“Some of California’s hardest working residents are being exploited simply because they desperately need a car to get to work or to drive their family to school or to the doctor,” Lieu told committee members yesterday.
Additionally, a second bill focused on the BHPH dealerships was introduced in January by Assembly Member Mike Feuer (D-Los Angeles) to prevent the installation of payment assurance devices, along with other mandates.
Kenneth Shilson, founder of the National Alliance of Buy Here, Pay Here Dealers (NABD) has found fault with both pieces of legislation.
Mr. Shilson believes the practices used by BHPH dealerships, “reflect the risk each dealer takes on when financing ‘unbankable’ customers.”
Implementing the use of a GPS tracking solution for asset protection and monitoring on BHPH vehicles has long since been standard practice in the industry.
Its use goes beyond simply ensuring that a BHPH borrower makes their payment on time. The GPS technology also helps in ensuring their vehicles are protected from possible theft and damage.