Los AngelesTimes

August 15, 2004

STEVE LOPEZ / POINTS WEST

Special Interests or 29% Interest?

Barbara Rogers, who cares for disabled people, went to Airport Honda in Los Angeles to buy a van and was told she qualified for a loan at 16%.

No way, said the 60-year-old Carson resident. Her credit is good, so why the sky-high financing charge?

When the dealer came down to 10.24%, Rogers bought the van. Only later did she find out she had actually qualified for a loan at 6.74%. The higher rate, which will cost her an additional $3,272 over the course of her loan, is known as the dealer markup.

I'd gladly give you Airport Honda's explanation, but one guy referred me to another guy, who didn't bother calling back.

"The way I feel right now," says Rogers, "I'd never buy another car from them."
Yeah, but where will she buy a car?

The Consumer Federation of America says inflated financing is routine, costing car buyers up to $1 billion annually in the United States. The group says victims include one out of every four people who get their loans through the dealer, and the biggest targets by far are minorities.

Californians would get protected under the car buyer's bill of rights introduced by Assemblywoman Cindy Montanez (D-San Fernando).

"I don't want more people coming into my office with 28% and 29% interest on their loans, which is ridiculous, arbitrary and discriminatory," says Montanez.

Her bill would also let buyers return a used car within three days of purchase if it's a lemon.

Unfortunately for consumers, the Schwarzenegger administration is opposed to the bill.

Gov. Arnold Schwarzenegger, himself, isn't personally out front on the issue, of course.

Instead, the DMV and Department of Finance have come out against the bill, which they claim would unnecessarily burden dealers and invite consumer complaints that drive up court costs.

In other words, too much justice can be disruptive.

When I asked where Schwarzenegger stands, a flack told me the governor doesn't talk about bills until he vetoes or signs them. So all I can do is take him at his word.

Schwarzenegger keeps railing against special-interest politics, so I have to assume there is no connection between the administration's opposition to the car buyer's bill of rights and the fact that Team Schwarzenegger has pocketed roughly $1 million in donations from the auto industry.

I'm trying to block out the fact that one of Schwarzenegger's first acts as governor was to fire the DMV director who had cracked down on auto-financing scams.

Then the governor paid a visit to Galpin Ford, whose owners donated $42,400 to the Schwarzenegger campaign. I was at the San Fernando Valley dealership when Big Boy took the stage and played car salesman, urging everyone to buy new wheels with the vehicle license tax refunds he was handing out.

The average savings on that tax was $158.