Posted On: July 1, 2006
Cars Dealers Loan Kickbacks Limited by California Car Buyers Bill of Rights Law
When a car dealer arranges a loan, the finance company often rebates some of the interest to the dealer. Finance companies do this to compete for the dealer’s business. For example, if the dealer placed a loan at 12%, the true finance company rate may be 9% with 3% refunded to the dealer from the finance company. The buyer was paying (a lot) for the dealer arranging the loan. Under the Car Buyers Bill of Rights that went into effective in July 2007, the interest refund is capped at 2.5% over the finance company’s rate for any loan of 60 months or less. For loans over 60 months the cap is 2%. This will save buyers some money. In the past, dealers have obtained kickbacks of as much as 6% over the finance company rate.
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