THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Thursday, November 17, 1994 TAG: 9411170458
SECTION: BUSINESS PAGE: D01 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium: 53 lines
A consumer advocacy group called Wednesday for abolishing ``as is'' sales of used cars by auto dealers in Virginia.
In a daylong program, the Virginia Citizens Consumer Council also criticized efforts in the General Assembly to eliminate interest-rate ceilings on consumer-finance loans.
Kathleen Caldwell, an attorney with the Charlottesville-Albemarle Legal Aid Society, described the predicament of low-income clients who bought used cars that needed major repairs within days or weeks of purchase.
When her clients could not afford the necessary repairs, they surrendered the cars but were sued for the remaining payments on their auto loans, Caldwell said during a discussion of the used-car market in Virginia.
``It points up to me the need not to allow `as is' sales,'' the legal-aid attorney said.
Heavy repair costs were especially burdensome, she said, because many who have bought used cars ``as is''financed their purchases with high-interest loans from the dealers.
``They don't look at the 39 percent interest,'' Caldwell said of the buyers. ``They look at the weekly or monthly payment. They don't understand the real payment.''
Curbing the abuses of some used-car dealers in Norfolk has been difficult, said Jeff Peacock of the Armed Forces Disciplinary Board in Norfolk. That's partly because lower-ranking sailors who have been victimized are often at sea and not available to challenge a dealer's actions, he told the gathering.
``We have one heck of a time keeping and identifying the victims,'' Peacock said. ``Our people are constantly moving.''
During a discussion of consumer-finance topics, David Rubinstein of the Virginia Poverty Law Center contended that the profitability of Virginia's consumer-finance industry made the elimination of interest-rate ceilings unnecessary.
As a group, consumer-finance companies in the state have been earning higher returns on equity and higher returns on assets than state-chartered banks, Rubinstein said.
When it convenes in January, the General Assembly is scheduled to consider a bill that would raise the interest-rate cap on consumer-finance loans of less than $2,500 from 31 percent to 36 percent.
The bill also would eliminate the ceiling on interest rates for larger loans and increase the limit on these loans from $3,500 to $6,000.
KEYWORDS: USED CAR SALES
by CNB