Authorizes the superintendent of financial services to oversee and regulate car dealer transactions with consumers

◆ The sponsor's argument

Why Siela Bynoe says this is needed

Abuses in the auto loan financing industry are harming many of New York's most vulnerable consumers. Most consumers do not have the indus- try-specific knowledge to properly negotiate with auto dealers on even footing, and the auto loan financing process is opaque. Requirements for disclosures and maintenance of important loan documents must be improved. Additionally, consumers are often not aware that with subprime auto loans, the cost of financing can be more than double the actual value of the purchased vehicle, due to high APRs and expensive add-ons like warranties and service contracts. To make matters worse, dealerships sometimes provide fraudulent loan applications to lenders without informing consumers that the application was ever filed. Lenders some- times turn a blind eye to this activity, even when consumers inform lenders of it. False applications result in the approval of loans which consumers cannot afford. Another confusing issue for purchasers buying vehicles are conditional deliveries, sometimes used to scam consumers into taking bad deals on autos. Spot delivery scams area problem that could be addressed through conditional delivery bans and transparency measures that inform consum- ers of the ban. Conditional delivery scams are also known as "spot delivery" scams or "yo-yo financing" scams. These scams involve putting a buyer into a vehicle and having the buyer take it home; the dealership then calls the buyer later to tell them the favorable terms on which they purchased the vehicle are invalid. The buyer, enjoying their new vehicle and fearing they have no other options, often agrees to the less favorable terms simply for the sake of keeping the vehicle. The less favorable terms are more profitable for the dealer. This legislation would help consumers better understand the auto financ- ing process with more transparent documentation, and would prevent confusing and deceptive tactics like spot delivery scams.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.