California state senator Tom Lieu (D-Torrance) introduced SB 956 yesterday, that would require Buy Here Pay Here car dealers to be regulated by the Department of Corporations as lenders. A companion bill (AB 1447) introduced last week by Assemblyman Mike Feuer (D-Los Angeles) would require Buy Here Pay Here dealers to display vehicle sales prices and would block dealers from using GPS trackers and devices to prevent the cars from being started.  


Under Lieu’s bill, dealers would have to file annual reports to the Department of Corporations, register as finance lenders, and pay a $1,000 annual licensing fee. 


Among the bill’s other major provisions is an interest rate cap on the retail installment contracts issued by these dealers, barring them from setting interest rates higher than 17% plus the federal funds rate.   In addition, the bill would prohibit dealers from repossessing cars themselves when a customer defaults. Instead, they would be required to hire a state-licensed repo company; they also would be obliged to offer consumers a grace period after repossession in which to pay off outstanding delinquency fees.