SACRAMENTO, Calif. — Gov. Jerry Brown signed into law two bills aimed at imposing new requirements on the state’s buy-here, pay-here (BHPH) dealers, but vetoed a third measure that insiders said would have put a lot of dealers out of business.

If it had gained Brown’s signature, Senate Bill 956, introduced by Sen. Ted Lieu (D-Torrance), would have capped interest rates that dealers could charge to originate a loan at 17.25 percent. It also would have required that dealers register with Department of Corporations. But Brown said in his veto message that he was not yet convinced such oversight was needed.

“I signed two buy-here, pay-here consumer protection bills this session,” he wrote. “If consumers need added protection once those bills are implemented, my administration will work with the Legislature to find appropriate, measured solutions.”

Ken Shilson, president and founder of the National Alliance of BHPH Dealers (NABD), said that Lieu’s bill could have had adverse effects on both the BHPH operations in California, as well as on consumers throughout the state.

“We think the [17.25 percent] rate is not fair. I have all of Experian’s numbers for used-car financing, and, as you might expect with the different levels of credit, it’s a stair-step,” Shilson said. “These consumers expect to pay a premium because of their poor credit history, and I don’t think the state should be involved.”

Gaining Brown’s signature were AB 1447, championed by Mike Feuer (D-Los Angeles), and Bob Wieckowski (D-Fremont)’s AB 1534. Both are set to take effect on Jan. 1, 2013.

Feuer’s bill prohibits BHPH dealers from forcing customers to make loan payments in person, and stipulates, among other requirements, further disclosures when payment-assurance devices, such as ignition shutdown technology, are installed in a vehicle for sale. The law also mandates that BHPH operations offer a minimum 30-day or 1,000 mile warranty to customers.

Wieckowski’s bill requires BHPH operations place a window sticker on vehicles for sale that shows its suggested market value, which new-car dealers have been required to do since 1958 under the Automobile Information Act. The bill will require the Department of Motor Vehicles to establish additional guidelines and regulations in order to implement that part of the bill.

Shilson shared that the NABD advocates full disclosure, so there is no issue with notifying buyers of ignition shutdown technology or with the mandated price listings on used vehicles. But Shilson made no secret his opposition to Lieu’s bill. “Can we live with some regulation? Yes, but I don’t see where [17.25 percent] is a fair rate,” he said.

Prior to Brown’s Sept. 30 deadline to sign bills into law, Lieu advanced a total of 15 bills to Sacramento, 13 of which gained Brown’s signature. In addition to SB 956, Brown vetoed Lieu’s SB 336, aimed to alleviate emergency room crowding, which Brown labeled best to leave to the discretion of hospital governing boards. As for SB 956, Lieu released a statement that he will continue to crack down on what he dubbed “predatory dealers.”

"While I am disappointed Senate Bill 956 was vetoed, I will work with the administration to address the excessive interest rates being charged by buy-here, pay-here dealers," read the statement. "I will also work with the administration to address the issue of excessive default rates and churning, where the same used car is sold over and over again."

Ray Sotero, communications director for Sen. Lieu’s office, added that it is too early to determine whether Lieu will prepare a revised bill. “We will use this time, as always, during the legislative interim to assess the senator’s legislative package for next year,” he said.

All three bills were introduced in January following a series of articles published by the Los Angeles Times that were critical of the BHPH business. Ken Bensinger, the reporter who wrote the articles, e-mailed a statement in response to the progress of the three resulting bills.

“It has been very gratifying to see legislators in Sacramento cite the LA Times’ reporting on the buy-here, pay-here industry in their decision to propose new legislation,” he wrote. “My editors and I feel the industry is interesting, important and has great impact on the lives of working families in California and around the country. That said, as a reporter, it is not my place to advocate for or against any legislation. However, I plan to continue following developments in the industry very closely.”