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California has moved one step closer to passing landmark legislation that would limit dealer markups on auto loans and give consumers more rights when buying a car.
The Car Buyer's Bill of Rights, as the legislation is called, moved forward when some consumer groups reached a compromise agreement with state auto dealers that would cap dealer markups at 2.5 percent for loans of 60 months or less, and 2 percent on loans longer than 60 months. Currently dealers can mark up auto-loan rates as much as they like without notifying buyers of the rate for which they actually qualified.
This version of the bill would also give used-car buyers a minimum three-day "cooling off" period in which they could cancel their contract. But they would have to pay a maximum $250 fee up front to exercise this option. If you returned a car, there would be a $500 maximum restocking fee, from which the up-front fee would be deducted. There is now no grace period for used-car buyers once they drive a vehicle off the dealership's lot.
"If adopted, California's Car Buyer's Bill of Rights would set a national precedent and could lead to similar consumer protections in other states," says Norma Paz Garcia, an attorney with Consumers Union (publisher of Consumer Reports and ConsumerReports.org), which is lobbying for the measure's passage.
The compromise makes passage of the bill in the state legislature more likely, consumer groups expect. The bill may be strengthened with more consumer protections--the senate is re-examining the $250 up-front fee to make it easier for consumers to return cars during the cooling-off period.
Governor Arnold Schwarzenegger has not taken a position on the bill. But should he veto it, labor groups have already collected enough signatures to put an even tougher initiative on the ballot in a future election. That initiative would cap dealer finance profits at $150 and give used-car buyers a three-day right of rescission with no up-front fee, but with a progressive restocking fee.
For complete Ratings and recommendations of more than 240 cars and trucks, subscribe to ConsumerReports.org.
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Car Buyer's Bill of Rights
California is getting closer to setting a standard for other statesCalifornia has moved one step closer to passing landmark legislation that would limit dealer markups on auto loans and give consumers more rights when buying a car.
The Car Buyer's Bill of Rights, as the legislation is called, moved forward when some consumer groups reached a compromise agreement with state auto dealers that would cap dealer markups at 2.5 percent for loans of 60 months or less, and 2 percent on loans longer than 60 months. Currently dealers can mark up auto-loan rates as much as they like without notifying buyers of the rate for which they actually qualified.
This version of the bill would also give used-car buyers a minimum three-day "cooling off" period in which they could cancel their contract. But they would have to pay a maximum $250 fee up front to exercise this option. If you returned a car, there would be a $500 maximum restocking fee, from which the up-front fee would be deducted. There is now no grace period for used-car buyers once they drive a vehicle off the dealership's lot.
"If adopted, California's Car Buyer's Bill of Rights would set a national precedent and could lead to similar consumer protections in other states," says Norma Paz Garcia, an attorney with Consumers Union (publisher of Consumer Reports and ConsumerReports.org), which is lobbying for the measure's passage.
The compromise makes passage of the bill in the state legislature more likely, consumer groups expect. The bill may be strengthened with more consumer protections--the senate is re-examining the $250 up-front fee to make it easier for consumers to return cars during the cooling-off period.
Governor Arnold Schwarzenegger has not taken a position on the bill. But should he veto it, labor groups have already collected enough signatures to put an even tougher initiative on the ballot in a future election. That initiative would cap dealer finance profits at $150 and give used-car buyers a three-day right of rescission with no up-front fee, but with a progressive restocking fee.
For complete Ratings and recommendations of more than 240 cars and trucks, subscribe to ConsumerReports.org.
Copyright © 2004-2008 Consumers Union of U.S., Inc.
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