Car Buyers Bill of Rights...and Wrongs

by : Peter Robinson

On July 1st, 2006, a landmark consumer protection bill became law in California. Known as the Car Buyers Bill of Rights, this bill has been more successful at confusing the public than it has been at eliminating predatory dealer practices. In it's final realization, it is an abject example of what can happen when well-meaning consumer groups make unrealistic proposals and settle for impractical solutions.

Key features of the bill include:

* Imposing a limit on the interest rate markup allowed to dealers when arranging an auto loan.

* Setting more specific criteria for cars that are to be sold as 'certified'.

* Establishing a two-day return option for buyers of used vehicles.

* Requiring dealerships to disclose to customers, in writing, their credit scores and the source of the information.

The GOOD: Capping the interest rate markup on loans arranged by dealers is the most important feature of this bill. This legislation places a markup limit of 2 1/2 percent on loans of 60 months or less, and 2 percent for longer terms. Many respectable dealers had already placed a similar limit on mark-ups themselves. The legislation originally called for the elimination of this fee altogether. The Finance department would have then been acting as a non-compensated loan broker.

The BAD: This legislation was originally aimed at all car dealers, but the 'cooling off period' is available only to used car buyers. So, if your new car does not please you...too bad! The 'cooling off period' does not apply to new car buyers. Being 'forced' to reveal the credit score to someone who did not check it out before trying to buy a car seems....well, let's face it: If you did not check your credit before going out to buy a CAR, either you are A) rich and don't care, or B) have perfect credit, or C) Your credit is so bad that it doesn't matter what the number just want to buy a car!! A raw credit score does not mean anything whatsoever to someone who does not approve loans for a living.

The UGLY: Talk about "fine print"! Car dealers are allowed to charge for the two-day return option! In other words, instead of creating a protection for buyers who feel they have been victimized , this bill has created another profit source for the dealership!

" Mr. Smith, you can have some piece of mind for only $300......"

For a vehicle priced at more than $10,000 , a $500 restocking fee may be charged. Of course, this assumes that you were back within 48 hours, drove less than 250 miles, and complied with all other the other small-type provisions. Who will go through all of that? Not many, even if they are not happy with their deal. Who will pay for the 'concept' of the right to go through all of that? Quite a few do.

It is difficult for folks to consider the implications of these "only $5 dollars a month" options when they come flying at them out of the blue. "This is only to protect YOU" or " This is an option the state requires us to offer for your protection". See what I mean?

AS ALWAYS, the best advice is to deal with people you know and trust. The typical car buyer will spend hundreds of thousands of dollars buying cars in their lifetime. It is essential to develop relationships with the sellers of vehicles. Talk to people you know, check with the Better Business Bureau, know where and from whom you will be buying your car from before you go out to do it!. DO NOT go driving from lot to lot hoping to find a car that "speaks to you". If the car really could speak to you, it might tell you to run away...