Ballot Proposal Prohibiting Dealership Markup on Interest Rates

The initial steps have been taken by a California consumer advocacy group Consumers for Auto Reliability and Safety to get a proposal on California’s November 2014 ballot prohibiting dealerships from adding on to interest rates on consumer car loans known as “hidden extra charges”.

The group understands and is okay with dealerships being compensated for arranging the auto loans as long as the dealerships don’t add on to the car buyer’s interest rate.

Other provisions would prohibit “bait and Switch financing or yo-yo financing” Where a buyer is able to take possession of a vehicle before loan approval and ends up agreeing to an interest rate that is higher when the loan does not get final approval. Another provision prohibits dealerships from the hiring of people that would have access to buyer’s personal financial information with prior convictions for fraud, forgery or identity theft.

President of the California New Car Dealers Association Brian Mass stated that no one including Consumers for Auto Reliability has any evidence of these allegations and it is “a solution in search of a problem”.