State prepares to roll out Car Buyer's Bill of Rights

By Blanca Torres
CONTRA COSTA TIMES
For many consumers, buying a used car can be a daunting process, but it will become less risky after a state law goes into effect Saturday.
The "Car Buyer's Bill of Rights" is not a perfect solution, consumer experts say, but will protect buyers from getting stuck with a car they don't want or excessive interest rates on their loans.
"Consumers will have more leverage and some of the worst abuses will be curbed," said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, an advocacy group based in Sacramento.
The law is the most comprehensive reform of car sales policies in years, said Marcella Rojas, spokeswoman for the California Motor Car Dealers Association, a group that supported the law.
California is the first state in the country to enact this type of law, although other states, including Massachusetts, are considering similar measures.
"The law is going to simplify the process, it's going to make the disclosures clearer for the customer and the dealer," said Denny Fitzpatrick, owner of Fitzpatrick Chevrolet, Buick and Hummer in Concord.
The main provisions of the law require dealers to provide a copy of a buyer's credit score and an itemized list of charges that make up the car's price. Experts said this is important because dealers sometimes add fees for anti-theft, service contracts and insurance policies that consumers don't know they are paying for or how much they cost.
"Prior to this legislation, there were a lot of things that people would buy that were lumped into the selling price of the vehicle," Fitzpatrick said. "Now, customers can see how those things are going to impact their monthly payment."
The law also limits dealer markups on loans to 2 percent or 2.5 percent depending on the length of the loan. Those markups have been known to be higher than 7 percent, Shahan said, which could add thousands of dollars to the cost of a car.
"People get into very bad car deals and this is a way to get out of them if people realize it soon enough," said Philip Reed, consumer advice editor at Edmunds.com, an automotive information service.
Another part of the law requires dealers to offer a two-day grace period for buyers to return cars for any reason. Buyers must agree to pay up to $250 for the option as well as a restocking fee should they return a car, which could make the cost of returning a car hundreds of dollars.
Some dealerships have offered similar return policies voluntarily, Fitzpatrick, but many of those required buyers to chose a different car.
"Regardless of what the laws are, how easy will it be to enforce this?" Reed said. "You're still quite likely to face rather intense opposition from the dealer (to return a car), but at least there is a law to fight and fall back on."
It could cost consumers up to $500 to return a car depending on the price. That seems like a lot of money for someone to change their mind, Shahan said, but it is cheaper than years of payments on a car the buyer doesn't want.
The main benefit of the law is that it will help consumers understand some of the most confusing aspects of buying a car.
"In the classic situation, people buy, they buy under pressure, they go home with an uneasy feeling. 'What exactly happened in the finance room? What are these numbers? Did I really agree to this?' " Reed said. "The anger people have to find out they've been misled or deceived lingers for years. This law will help people like that."
CAR BUYER'S BILL OF RIGHTS
BEFORE YOU BUY
• Dealers must provide buyers a copy of their credit scores if financing is involved in the deal.
• The rules lay out uniform criteria for labeling a used car as "certified." Right now the designation is up to each manufacturer.
• Dealers cannot mark up loans more than 2.5 percent for loans lasting five years or 2 percent for loans lasting longer than five years.
• Dealers must disclose prices for items such as service contracts, debt cancellation agreements, insurance products, surface protection services and theft deterrent devices.
• Dealers must offer a two-day return option for used cars priced below $40,000. Buyers may return their vehicle for any reason and receive a full refund minus fees. Buyers must pay a fee for the option and a restocking fee, both of which are specified in the new rules.
The buyer cannot drive the car farther than 250 miles during the grace period. Normal wear and tear is allowed.
Source: Consumer Action.
• Know the price of the type of car want to buy.
• Know your credit history and clear up any problems.
• Find out about additional frees and dealer extras you may be charged.
• Research an adequate price of your trade-in vehicle.
• Request financing from a bank or credit union. The rate may be less than a dealer's or you can use it to negotiate a lower one from a dealer.
Source: Edmunds.com