Car Dealers

Car dealers have found a new way to profit from people with money trouble: leasing them hand-me-down vehicles. The deals are pitched to customers as the cheapest way to drive a used car off the lot, with the added benefit of an easy escape for those who can't keep up with the payments. Few customers are told about the advantages on the other side of the trade. Leases can allow dealerships to sidestep interest rate caps, and there are fewer financial disclosures rules than with a conventional car loan.

Re "Tesla sparks dealer ire," Oct. 26 The car dealers and their legal mouthpieces are trying to pull the same shenanigans with Tesla Motors, which sells its cars directly to consumers instead of through franchisees, that the liquor distribution cartel has been doing to small-time brewers and distillers in most states with the mandatory three-tier system. I've got something for these big businesses to try on for size: their beloved free market. They want influence in the courts and state legislatures when it benefits only them, which is the exact opposite of the free market.

A new bill of rights for California car buyers provides grace periods for used-car purchases, caps dealer compensation on loans and features other provisions that are some of the strongest consumer protections in the country, according to state legislators and consumer advocates. The law, which went into effect July 1, applies to motor vehicles bought in California from a dealer for personal, family or household use.

Auto research firm J.D. Power and Associates talks to thousands of car buyers every year and has discovered three simple steps car dealers can take to vastly improve customer service. In a survey of luxury-car buyers, J.D. Power found that when a dealership presents price information to a consumer in a computer printed format rather than scribbles on a hand-written offer sheet, a measure of satisfaction with the buying process jumps 45 points on a 1,000-point scale. Dealers should learn to move off their “legacy formats for presenting price information,” said Mike Battaglia, director of auto retail for J.D. Power.

While some Americans are congratulating themselves on switching to fuel-sipping cars, their old gas guzzlers just won't die. Lowered trade barriers are giving them new life south of the border. Thousands of used vehicles from as far away as Colorado and Missouri jam tiny car lots and auto salvage yards in this gritty border city. An estimated 25,000 families make a living here hustling U.S. castoffs. Among them is Jose Zavala, a wiry used-car dealer with a trucker's cap and an eye for bargains.

Legislation aimed at regulating controversial Buy Here Pay Here used-car dealers, which charge steep interest rates and are quick to repossess vehicles, was approved by the state Senate Banking and Financial Institutions Committee. The bill, by Sen. Ted Lieu (D-Torrance), classifies the dealerships, which finance most of their own sales, as state-regulated lenders. "This bill regulates an unregulated industry," Lieu said. The bill cleared the committee on a party-line vote Wednesday, with five Democrats voting aye and two Republicans nay. The proposal now heads to the Senate Appropriations Committee and then to the Senate floor.

Latino and Asian car dealers are outnumbered almost 2-to-1 by black dealers, according to the National Assn. of Minority Automobile Dealers, and the gap seems to be widening. Ford, for example, has the car industry's most aggressive minority dealer development program, with 187 black dealers now and a target of 320 by the end of next year. Yet it has just 28 Latino-owned dealerships and six owned by Asians. Only three of Ford's 40 dealer trainees are Latino and none are Asian.

We knew he was a man of many talents, but Gov. Arnold Schwarzenegger was a knockout Thursday in a new role: San Fernando Valley car salesman. "Go out there. Buy cars," Schwarzenegger implored a few hundred disciples at Galpin Ford on Roscoe Boulevard in North Hills. New car, used car, any car. Just buy a car, said the governor, and enjoy the benefit of the vehicle tax reduction he enacted Monday, his first day in office.

SACRAMENTO — A trio of bills aimed at preventing abuses in the sale of high-mileage vehicles by Buy Here Pay Here used-car dealers appears to be winning strong bipartisan support and heading toward the governor's desk. Legislation by Assemblyman Mike Feuer (D-Los Angeles) won final passage Monday and was sent to Gov. Jerry Brown, who has 30 days to sign or veto it. Feuer's bill, AB 1447, requires the seller to provide a one-month or 1,000-mile written warranty to a buyer. On Tuesday, a companion measure, SB 956 by Sen. Ted Lieu (D-Torrance)

In the shadow of a big blue inflated gorilla perched on the roof, bright yellow signs shouted "Ultimate Liquidation Event." Deep price cuts, painted in bold neon letters, adorned the windshield of nearly every car on the Garden Grove dealership lot. Janice and Yao Huang arrived on a hot afternoon looking for a bargain. "We're here for the sale," Yao told Danny Covin as he approached, squinting in the sun. "We heard you are closing down. Do you have things on sale?"

In a landmark step to protect consumers from predatory vehicle loans, Gov. Jerry Brown signed into law two bills regulating specialized used-car dealers known as Buy Here Pay Here lots. For the first time, the dealers that offer their own in-house financing and target people with damaged credit and low incomes will be required to provide warranties on every car they sell in California. The new laws also oblige Buy Here Pay Here dealers to post fair-market values on their autos while giving customers greater flexibility in making payments.

The future of California's Buy Here Pay Here used-car industry now rests in the hands of Gov. Jerry Brown. State lawmakers on Thursday gave final approval to two bills that would apply sweeping new regulations on the dealerships, which sell high-mileage cars to people with damaged credit. They join a third piece of legislation, passed Monday, on the governor's desk in Sacramento. If signed into law, the bills would impose what is probably the most aggressive and far-reaching set of controls on the Buy Here Pay Here industry in the nation and could set a template for other states.

SACRAMENTO — A trio of bills aimed at preventing abuses in the sale of high-mileage vehicles by Buy Here Pay Here used-car dealers appears to be winning strong bipartisan support and heading toward the governor's desk. Legislation by Assemblyman Mike Feuer (D-Los Angeles) won final passage Monday and was sent to Gov. Jerry Brown, who has 30 days to sign or veto it. Feuer's bill, AB 1447, requires the seller to provide a one-month or 1,000-mile written warranty to a buyer. On Tuesday, a companion measure, SB 956 by Sen. Ted Lieu (D-Torrance)

SACRAMENTO - Two bills aimed at regulating Buy Here Pay Here used-car dealers have cleared key hurdles in the statehouse, bringing them closer to final passage. Legislation by state Sen. Ted Lieu (D-Torrance) passed the Assembly Appropriations committee Thursday, just minutes after the committee's Senate counterpart passed a bill by Assemblyman Bob Wieckowski (D-Fremont). The bills would impose numerous regulations on the dealers, which sell - and often resell - high-mileage used cars to buyers who have shaky credit but need vehicles to drive to work.

In July 2009, an educational charity sold an 11-year-old Oldsmobile Intrigue at auction, where it was bought by Auto World Auto Sales. The Sacramento dealership, which advertises "in-house financing," put the aging sedan on its lot and quickly found a buyer willing to pay $4,899. Six weeks later it was repossessed and sold to someone else. A few months later, the car was repossessed and sold again. And again . And again . And again . All told, the Olds, which at last count had 182,000 miles, has been sold eight times by Auto World Auto Sales.

Under a new law regulating vehicle purchases, buyers could pay higher fees, but they'll get more protection from purchasing lemons. Here are key provisions of the law, which went into effect July 1: The documentation fee that car dealers can charge for each purchase or lease has risen to $80. Previously, the fees were capped at $55 for a purchase and $45 per lease. Dealers are now required to run every used car they sell through a federal database — the National Motor Vehicle Title Information System — to determine whether it was ever totaled, salvaged, swamped in a flood or returned as a result of a lemon law complaint.

SACRAMENTO - Two bills aimed at regulating Buy Here Pay Here used-car dealers have cleared key hurdles in the statehouse, bringing them closer to final passage. Legislation by state Sen. Ted Lieu (D-Torrance) passed the Assembly Appropriations committee Thursday, just minutes after the committee's Senate counterpart passed a bill by Assemblyman Bob Wieckowski (D-Fremont). The bills would impose numerous regulations on the dealers, which sell - and often resell - high-mileage used cars to buyers who have shaky credit but need vehicles to drive to work.

With legislation to impose new regulations on Buy Here Pay Here dealers marching through the statehouse, California's used car industry is redoubling efforts to block their passage. But the insurgent opposition, which in recent weeks formed a new group to stop the three bills, will have to take its fight to Sacramento without the aid of one of the state's most powerful lobbies - new car dealers. The Coalition to Protect Our Freedom to Drive argues that the bills, which last month passed floor votes in their originating houses, would cost the state hundreds of millions of dollars in lost sales tax revenue and keep working families from gaining access to vehicles.

NEW YORK — "Wheels of Fortune," the Los Angeles Times series that exposed the world of Buy Here Pay Here car dealers, was honored with a Gerald Loeb award at a ceremony here Tuesday night. The Wheels series by Business reporter Ken Bensinger won in the Large Newspapers category, eclipsing two entries from the Wall Street Journal and one from the New York Times in that competition. Bensinger's stories explained the shrewd business model that underpins Buy Here Pay Here. The buyers are people who need cars to get to work but whose credit is so poor they can't qualify for traditional loans.

You want a car, but you can't afford the price or the payment terms offered by regular used-car dealers. Then you find someone who's ready, willing and able to bargain: A so-called Buy Here, Pay Here dealer who will let you finance the purchase price. Sure, the rates are high, as is the chance that you will miss a payment and the vehicle will be repossessed, but those are the breaks, right? Why should the government step in and police these kinds of deals? Generally, it's best to leave private transactions like these to the market.