Industry groups challenge proposed BHPH law

Three groups representing the interests of automobile dealerships have come together to challenge plans by the Oregon state legislature to introduce new legislation targeting Buy Here-Pay Here (BHPH) auto dealers.

The bill – Senate Bill 276 – would completely rewrite the rules for dealers who provide financing for credit‐challenged customers, with a long list of requirements for BHPH dealers.

The Oregon Independent Automobile Dealers Association (IADA), along with the trade body the National Independent Automobile Dealers Association (NIADA ) and the newly formed NIADA Buy Here‐Pay Here Commission have formed a coalition to challenge the proposals, claiming they were unnecessarily onerous and would have a negative impact on the auto finance industry.

Amongst the requirements under discussion are that dealers should obtain the same type of license from Oregon’s Department of Consumer and Business Services as payday or auto title lenders.

BHPH dealers would be required to cap interest rates at no more than 20% or the federal funds rate plus 17%, whichever is lower, and reduce interest rates to account for the amount of the consumer’s down payment.

In addition, dealers would need to apply specified underwriting standards to check that the consumer has the ability to perform on the contract, and would need to agree to stop accruing interest once a vehicle has been repossessed.

Additional rules covering repossession in the bill include waiting to repossess a vehicle until after 30 days from when non-payment has occurred, and capping repossession fees at 7.5% of the purchase price. BHPH dealers would also be prevented from using GPS or starter‐interrupt devices fitted to vehicles to allow for remote repossession.

NIADA regulatory counsel Shaun Petersen said: “Obviously, the bill is as comprehensive a regulatory framework as would exist in the country. And it’s wholly unworkable for the industry.”

Currently, the bill is pending before the Senate Business and Transportation Committee. NIADA, OIADA and the BHPH Commission say they are continuing lobbying efforts to oppose the bill on behalf of their members and the used vehicle industry as a whole.