Used-car customers to get protection under proposed city law
Used-car customers would get new protection under a proposed city law curbing predatory lending practices in sales and financing of used cars. But some car dealers in the city say it is unneeded and restrictive.
New York City Council’s Committee on Consumer Affairs approved the bill Thursday that now awaits the endorsement of the City Council before it goes to Mayor Bill De Blasio for his signature. The bill was introduced in April 2017 after New Yorkers complained about such scams as falsifying a vehicle’s value, hidden add-ons, and confusion over financing options.
Of the committee’s five members, four voted in favor while one member, Julissa Ferrerras-Copeland, was not present in Thursday’s session.
“It is time we rein in predatory used auto dealers who deceive and target their victims,” said Councilmember and committee chair, Rafael Espinal, in a statement. “This package of legislation will increase disclosures, protect consumers and enhance penalties, showing NYC’s commitment to penalizing predatory wrong-doer.”
If the law goes in effect, dealers will be required to disclose important information to the buyer. This includes the total cost broken down by monthly payments, the cost of any add-on items, and the lowest interest rate available to the customer by a finance company. The customer would also have the choice to cancel the purchase within two days. Presently, a used car consumer has the option to arrange financing through the dealership, or directly from a bank. The dealer can add additional fees and costs to the loan, if the customer is not aware of the process.
Rob Patel, a manager at Honda Paragon, a used-car dealership in Woodside, Queens, questioned the need for the law when the customer already has access to information available online at those provided by dealers like himself. “More customers are aware of what they are buying, when they’re buying a car or house,” he said. “How is it that we are still passing the consumer-protection laws?”
Delvin Davis is a senior research analyst with The Center for Responsible Lending, a non-profit that works against predatory lending practices. He agrees that “while it true that there is a lot of information online for the consumer, such as the price of the car, information on the costs of financing and add-ons are not openly available.”
“There have been instances where dealers have told consumers that purchasing add-ons was mandatory to finalize the sale, which is illegal,” Davis adds.
David Droced, owner of Supercar Motors in the Bronx, thinks that laws like these hurt small businesses in the city: “Used-car dealers should itemize the costs, but the city needs to educate people on both sides, the customer and the dealer, to avoid scams.”
From 2013 to early 2017, the Department of Consumer Affairs received 826 complaints from customers “related to purchase or payment issues in connection with secondhand vehicles,” the department said. A public awareness campaign launched in June 2017 offers tips to buyers.
One frustrated buyer is Suleman Osman, an immigrant from Ghana. Osman buys used cars and resells the parts — and he needs to know about even minor defects. He says the law would help customers like himself because “people lie about cars all the time. If it has three problems, they will say one small issue.”
