Predatory Lending

AB 2006 (Perez) authorizes state-chartered credit unions to provide vital financial services to Californians who do not have bank accounts.

The Buy Here Pay Here industry consists of used car dealers that lend to people with bad credit. Their business practices are characterized by inflated interest rates and frequent repossessions from their cash-strapped customers.

SB 890 requires that debt buyers have essential information about a debt before they try to collect it or bring a lawsuit, and share that information with the consumer on request.

Although short-term loans with triple-digit annual interest rates have been deemed predatory and barred in 17 other states, attempts to regulate payday lending in California have not made it very far.

Consumer advocates questioned the effectiveness of an $8.5 billion settlement to resolve charges that 10 major banks mishandled foreclosures and loan modifications, saying details remain murky and that the amount of money will be minimal once distributed among millions of people.

The California Senate gave final approval Thursday to legislation that would regulate "buy here, pay here" auto dealers, responding to reports that they exploit low-income consumers with high interest rates and harsh repossession practices.