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Calif. Initiative Proposes $150 Flat Fee

A California initiative proposes to limit auto retailers' profit to $150 for helping a customer secure a vehicle loan.

by Staff
February 14, 2005
1 min to read


A California initiative proposes to limit auto retailers’ profit to $150 for helping a customer secure a vehicle loan.


The effort could become the most serious attempt to impose flat fees on auto dealers, and stimulate similar campaigns in other states, reported Automotive News.

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Two San Francisco area lawyers, Robin Johansen and James Harrison, are sponsoring the ballot proposal.


The proposal requires 373,816 signatures of registered California voters to qualify for the ballot. Those signatures must be validated at least 131 days before an election.


Brian Maas, a lobbyist for the California Motor Car Dealers Association, told the paper that his group is taking the proposal seriously.


Voter approval of the flat-fee plan "would wreak havoc on the way cars get financed" in the state, Maas said. Limiting dealers' finance profit, he said, could force them to charge more for vehicles.


Last year, California's legislature rejected a similar proposal for a flat $150 limit on dealer finance profit per transaction. When the measure's sponsors reintroduced it this year, they substituted a 2.5 percentage point cap on interest rate markups for the flat fee.

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Consumer advocates say reasonable flat fees would adequately compensate dealers for handling vehicle financing, without allowing them to gouge customers.


Plaintiffs in lawsuits challenging dealers' markup of wholesale loan rates allege the practice has led to overcharging minority customers.

Topics:F&I

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