According to recent reports from the New York Times, a group of eleven consumer and safety organizations are petitioning the Federal Trade Commission (FTC) to investigate used car dealership, CarMax, for deceptive advertising practices. The group claims that the dealership is advertising their pre-owned vehicles as passing a rigorous 125 point quality inspection, but the inspection fails to carry out the basic step of checking to see if there are any unfixed safety recalls affecting the vehicle. Continue reading
Tag Archives: used auto sale
California Bill Prohibits Sale Of Recalled Used Vehicles
Santa Barbara Senator, Hannah-Beth Jackson is proposing a bill that will prohibit automobile dealers from selling, leasing, renting, or loaning used cars that are under recall until the problem can be repaired. Federal law already prohibits new cars from being sold when they have known recall defects, but Jackson’s bill would extend the ban to prevent unsafe automobiles from getting into the hands of unaware used car buyers. According to a poll carried out by Consumers for Auto Reliability and Safety (CARS), a key supporter of the bill, almost 90% of Californian voters support the legislation. Continue reading
Are You Thinking Of Buying a Used EV?
According to CNW Marketing Research in Bandon, Oregon, there are approximately 415,000 used electric vehicles (EV) on the market right now, and like regular used vehicles they are cheaper than buying new and can save you money on insurance. If you are thinking of purchasing a used vehicle and you would like to buy a hybrid, there are certain factors to take into consideration when shopping for this type of vehicle. Continue reading
California Automobile Consumer Recovery Fund
In 2008, as hundreds of California auto dealerships closed down, consumers trading in their old vehicles were often left with two car payments as a result of the dealer not absolving the trade in loan before they went out of business. Continue reading
No Lemon Law Protection For Flood Vehicles
It has been about a month since Hurricane Sandy devastated the eastern shores of the United States killing hundreds of people and leaving a path of destruction believed to cost billions. It is estimated that high waters and heavy rains resulted in approximately 250,00 flooded vehicles. Continue reading
CA Auto Bill Wants New Rules For Dealerships
California lawmakers are are hoping to protect working families by imposing tough new rules on “Buy Here Pay Here” automobile dealerships. Assemblyman Mike Feuer introduced the bill last week saying that it would limit unfair sales and collection practices used by these dealerships. Some of the changes include:
- Dealerships would be required to display the price of the vehicles on the car where customers can see it.
- Customers would not be forced to make payments in person at the dealership.
- Dealers would not be allowed to call personal references after the sale is complete.
- Dealerships would not be allowed to install GPS trackers or devices that can remotely shut down vehicles.
Lobbyist for the Independent Automobile Dealers Assn. of California, say that enforcement, rather than new regulations, would be a better way to handle problems with Buy Here Pay Here dealers. They say that the new bill would impose additional costs on all dealerships, putting legitimate dealers out of business. In the end, people with bad credit will find it even harder to get an affordable and reliable vehicle.
Alternatives To Buy Here Pay Here Auto Sales
Studies have shown that low-income people can increase their income, are more involved in the community, and have better access to healthcare when they have their own transportation. It is also estimated that one in four needy families do not have a car. The U.S. Transportation Department plans to spend over $100 billion on roads, bridges, public transit, and rail projects, but has little money allocated to help the poor purchase a car. Some feel that the government actually made it harder with programs like “Cash For Clunkers”. The program resulted in higher priced used automobiles by removing almost 700,000 running vehicles from roads. In some states, people receiving government aid are restricted to how much they can spend on a vehicle, leaving them with an unreliable car or no car at all.
Consumers that need a car, but have bad credit, feel they have no alternative but to turn to Buy Here Pay Here dealers. These dealerships advertise themselves as providing a valuable service to consumers, as they make big profit off the misfortune of others. Prices and interest rates are high, and the chance of having your vehicle repossessed is one in four, allowing the dealership to sell vehicles over and over again.
There is about 160 nonprofit organizations nationwide that try to provide affordable used cars to needy families. Some receive public funds, but for the most part they operate on donations and can help only a small percentage of families that need it. Rep. Gwen Moore (WI-04) has tried for years to get the government to help the poor buy cars. In 2005 and again in 2007, she sponsored legislation to provide $50 million a year for low-income car ownership programs. Both bills were rejected.
Buy Here Pay Here Auto Sales Make Big Profits
People are finding a good investment in a niche of the used car business known as “Buy Here Pay Here” auto sales. In the last two years, investors have bought more than $15 billion in sub-prime auto securities with the hopes of cashing in on profits that average 38% for each vehicle sold. Two of the biggest, America’s Car-Mart Inc. and Credit Acceptance Corp., have seen the biggest gains well above the regular market.
The Buy Here Pay Here vehicle market focuses on helping people buy a vehicle when they can’t qualify for conventional loans. Because the customer is a risk and can’t get a loan anywhere else, the dealership can get away with selling the vehicle for more than it’s actually worth, charge interest rates up to three times the national average, and use aggressive repossession tactics when the customer defaults. Because Buy Here Pay Here businesses are both auto dealers and consumer lenders, it’s not always clear who has authority over them. As a result, each dealership tends to set their own rules.
Although they’re backed mainly by installment contracts signed by people who can’t even qualify for a credit card, most of these bonds have been rated investment grade, some receiving the highest ratings. But so were the financial strategies that drove the nation’s recent housing bust. “We think that investing in such companies is a ticking time bomb,” according to Joe Keefe, chief executive of Pax World Management, “It has ethical as well as systemic risk implications.”
