Used car dealerships doing business in New York City have some new rules to observe thanks to legislation crafted late last year that went into effect at the beginning of this month. Under the terms of the New York City Department of Consumer Affairs Local Laws 197 and 198 of 2017, dealers must provide a financing statement in a prescribed form prior to the execution of any retail installment contract. The form includes “sale terms,” “financing terms,” and pricing information for any add-on products or services.
Specifically, the new rules:
- Require dealers to provide financing disclosures to consumers;
- Mandate that dealers must post prices for cars and can’t charge more than the posted price;
- Clarify the automobile contract cancellation options that dealers offer to consumers;
- Create a consumer bill of rights that dealers must display; and
- Clarify requirements related to record-keeping by dealers.
In terms of financial disclosures, the rules mandate that financing terms include two annual percentage rates: the contract APR (the APR for the financing that the buyer will actually be receiving and will be the APR that is disclosed in the TILA disclosures that are part of the buyer’s RIC) and the “lowest APR offered to buyer by any finance company with the same term, number of payments, collateral, and down payment” (meaning disclosure about whether the dealer could have obtained comparable financing for the buyer at a lower APR).
In addition, the dealership must offer the buyer a form that outlines their rights to cancellation of the sale within two weekdays (with a full refund) to give buyers time to review the contract away from the dealership and any “hard sell” tactics of salespeople.
Finally, dealers must provide buyers with a “Used Car Consumer Bill of Rights” that must be provided to customer and posted prominently in the dealership (both in English and any other language in which the dealership does business).
“Buying a used car is a major financial commitment,” said Department of Consumer Affairs Commissioner Lorelei Salas. “By requiring used car dealerships to offer additional disclosures, we ensure that hard-working New Yorkers are able to have a fair and transparent deal when purchasing a car. These rules provide added protections for all consumers, especially those who fall victim to predatory practices.”