SACRAMENTO, Calif. — Jan. 1 might be more important to
California buy-here, pay-here dealers than it just being the first day of 2013.
It also could be the day three bills now sitting on Gov. Jerry Brown's desk
become laws that significantly change the industry in the Golden State.

As the state legislature winds down its current session
today, lawmakers passed the remaining two measures aimed at BHPH dealers by
healthy margins earlier this week.

On Thursday after the Assembly approved the measure, the
Senate gave final approval to Senate Bill 956 by a 23-14 vote. The bill's
author, Sen. Ted Lieu, cheered the move.

"Senate Bill 956 seeks to regulate so-called ‘buy-here,
pay-here' used-car ‘loan sharks' who charge up to 30-percent interest," Lieu said.

"Many of these dealers take advantage of our lack of laws to
prey on desperate workers, low-income families and members of the military by
pushing unregulated loans to sell cars for far beyond market value," he
continued.

Lieu's measure has three main goals:

—Impose first-ever regulations on dealers offering buy-here,
pay-here installment loans by requiring them to obtain a California Finance
Lender's license, which lawmakers believe would provide consumers with an array
of protections.

—Limit used-vehicle installment loans to no more than
17-percent interest, plus the variable Federal funds interest rate, which today
is 0.25 percent. This would give California the strongest cap in the nation.

—Change the way BHPH dealers are able to repossess vehicles to
include grace periods and make it easier for buyers to reinstate a repossessed
unit.

Meanwhile, another measure geared to regular BHPH dealers
passed easily on Thursday, too. After moving through the Senate by a 23-9
margin, the Assembly pushed along Assembly Bill 1534 by a 48-28 vote.

AB 1534 would require a BHPH dealer to display a label on
any used vehicle offered for retail sale that states the "reasonable market
value" of the unit. The bill would require the label to contain specified
information used to determine the vehicle's reasonable market value and the
date the value was determined.

Moreover, AB 1534 would require a BHPH dealer to provide to
a prospective buyer of the used vehicle a copy of any information obtained from
a nationally recognized pricing guide the dealer utilized to determine the
reasonable market value of the vehicle.

Before Thursday's developments, AB 1447 won approval in both
legislative chambers and was sent on to Brown, who has until the end of
September to sign or veto these bills.

The main points of AB 1447 include:

—Require BHPH dealers to provide a written warranty that
covers most major components and lasts for at least 30 days or 1,000 miles,
whichever happens first.

—Prohibits BHPH dealers from requiring a buyer to make
regular payments in person.

—Requires BHPH dealers to receive written consent from the
buyer prior to selling a vehicle equipped with electronic tracking technology.

—Requires BHPH dealers to provide notice to the buyer of the
presence of "starter interrupt" technology in the vehicle, ensuring
that advance warnings are provided to the driver — prior to the vehicle being
disabled — in order to help avoid stranding a driver in dangerous
circumstances.

"Without the protections included in AB 1447, mostly
low-income buy-here pay-here customers can't be sure they are buying dependable
vehicles," said Assemblyman Mike Feuer, who authored the measure.

"This bill requires a minimum warranty to help ensure buyers
are paying for reliable transportation and other critical safeguards for
consumers," he continued. "I urge the governor to sign this critical measure."

Editor's Note: Are you a BHPH dealer in California? SubPrime
Auto Finance News wants to share your story about how you're going to prepare
if these bills become law. Please contact editor Nick Zulovich at
nzulovich@subprimenews.com.


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