California - Car Buyers Protection Act

[XDCX]

A state senator from California has announced a bill entitled the "Car Buyers Protection Act" that would make several changes to existing state law.

• Require dealerships to pay-off liens on trade vehicles before the vehicle is re-sold or the next payment is due - whichever comes first
• Increases the dealer bond from $50,000 to $250,000
• Expands the violations that trigger the bond
• Allows consumers to access the assets of the Dealer Principal in certain situations that involve fraud

Here's a link to the news report: http://www.californiachronicle.com/articles/view/89121

It seems like it would be difficult to comply with the lien pay-off provision detailed in the bill - especially when many customers like to trade their existing vehicle just a few days before the next payment is due.

[XDCX]

I read another news report and was happy to see that the California New Car Dealers Association is working with the Senator to make changes to the bill.

It was interesting to read that portions of the bill would put pressure on dealerships and may force them out of business. As an example, the annual premium for a $250,000 bond would be significantly higher than the $1,500 that's typically paid for a $50,000 bond.

Even more interesting, was the comment that most bond issuers require that the dealer have 10 times the amount of the bond available as liquid assets - that would be $2.5 Million.

Here's a link to the news report: http://www.contracostatimes.com/news/ci_11567807

[SHACOS]

Wow...they already have the Car Buyer's Bill of Rights. It's becoming tougher and tougher to do business in California.

[XDCX]

Originally Posted by SHACOS

Wow...they already have the Car Buyer's Bill of Rights. It's becoming tougher and tougher to do business in California.

I agree and I think that's one of the reasons there have been so many dealerships that have closed.

Hopefully they'll get this bill sorted out and make it more realistic before they try to pass it into law.

[okcarl]

I did business in California for several years and this type of legislation is why I left. California is always ahead of the trend so if this is not nipped in the bud it will soon spread across the country. Especially since there are articles allready showing up on MSN etc. talking about how customers loans etc. are not getting paid off. I can forsee customers coming in shortly wondering if we are going to be able to pay off their loans.

[XDCX]

Originally Posted by okcarl

I did business in California for several years and this type of legislation is why I left. California is always ahead of the trend so if this is not nipped in the bud it will soon spread across the country. Especially since there are articles allready showing up on MSN etc. talking about how customers loans etc. are not getting paid off. I can forsee customers coming in shortly wondering if we are going to be able to pay off their loans.

That's an excellent point - California is often seen as a "progressive" state and many trends that start there spread throughout the U.S. Just think about all of the anti-smoking laws - most of them started in California.

What makes the situation even worse is the fact that California is broke - they're going to start issuing IOUs to certain vendors due to cash constraints.

When the politicians are looking to raise tax dollars and clamp-down on businesses, car dealers are easy targets.