Legislature(2005 - 2006)CAPITOL 17

02/09/2006 01:30 PM TRANSPORTATION


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01:41:36 PM Start
01:44:40 PM HB383
03:05:35 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
= HB 383 MOTOR VEHICLE TRANSACTIONS
Moved CSHB 383(TRA) Out of Committee
HB 383-MOTOR VEHICLE TRANSACTIONS                                                                                             
                                                                                                                                
CO-CHAIR GATTO  announced that the  only order of  business would                                                               
be  HOUSE BILL  NO. 383,  "An Act  limiting motor  vehicle dealer                                                               
charges for fees and costs;  relating to the disclosures required                                                               
for certain  motor vehicle transactions; and  requiring consumers                                                               
to be informed of finance charges  paid to a motor vehicle dealer                                                               
by a financing institution on the sale of a used motor vehicle."                                                                
                                                                                                                                
CO-CHAIR ELKINS moved to adopt  the proposed committee substitute                                                               
(CS) for  HB 383,  Version 24-LS1287\S,  Bannister, 2/3/06,  as a                                                               
working document.   Hearing no  objections, Version S  was before                                                               
the committee.                                                                                                                  
                                                                                                                                
REPRESENTATIVE GARA  said HB 383  solves two problems  that exist                                                               
in  some used  car  business practices.   He  noted  that it  was                                                               
thought that  the legislature had  addressed one of  the problems                                                               
in  2002.   He  explained  that  consumers  are often  charged  a                                                               
documentation fee on  top of an agreed sales prices.   The fee is                                                               
called  "doc" and  some  consumers are  led to  believe  it is  a                                                               
government  fee, but  it is  a profit  to the  dealer of  $200 to                                                               
$250.  He noted  that a used car dealer can  charge any price for                                                               
a car,  but "we  don't want  consumers to  believe that  they are                                                               
paying a fee that is required  when it's not required."  Part one                                                               
of HB  383 addresses the  "doc" fee  issue by requiring  that the                                                               
negotiated or advertised  price be inclusive of  all fees, except                                                               
for government fees.                                                                                                            
                                                                                                                                
1:44:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA said  there are a number of  used car dealers                                                               
that don't  do that any  more, but some do.   The other  issue is                                                               
the  dealer  reserve  fee  for  loans on  cars  through  the  car                                                               
dealership.  The dealership may  charge a higher interest rate to                                                               
the consumer than  the dealership is getting from a  bank.  "Many                                                               
consumers believe  that that's the  rate that's being  offered by                                                               
the bank,  but, in fact,  in many cases,  the bank would  offer a                                                               
lower  rate,  and  the  dealer  is  keeping  a  portion  of  that                                                               
percentage," he stated.  Representative  Gara said dealers can do                                                               
that  but  consumers should  be  informed.    He noted  that  the                                                               
original  version of  HB 383  was  more stringent  by making  the                                                               
dealer tell  the consumer how much  the fee differed, but  the CS                                                               
simply  requires  the dealer  to  notify  the consumer  that  the                                                               
dealer is  "keeping a  portion and  they don't  have to  say what                                                               
that portion is."                                                                                                               
                                                                                                                                
1:46:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  said HB 383  is about  full disclosure--just                                                               
informing  consumers that  certain fees  are being  charged.   He                                                               
added  that  neither  parts  of the  bill  prevent  dealers  from                                                               
charging whatever they want as a  sales price.  He said there was                                                               
a case  in Anchorage where  a consumer  bought a $23,000  car and                                                               
was told  she was being  offered a  5.9 percent loan  from Denali                                                               
Alaska Credit Union.   As it turned out, there  was evidence that                                                               
the bank  had offered the dealer  the loan for 4.5  percent.  The                                                               
dealer didn't  tell the buyer and  kept the difference.   He said                                                               
the  legislation just  lets the  consumer know  if the  dealer is                                                               
keeping a portion.   The consumer might not get  a better deal on                                                               
his or  her own,  or a  consumer might choose  to pay  the higher                                                               
loan rate out  of convenience, "but we want to  give the consumer                                                               
information  because they  do believe  when they  see the  bank's                                                               
name next  to the loan interest  rate, that that's what  the bank                                                               
is charging."                                                                                                                   
                                                                                                                                
1:48:34 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO  said when he  gets a loan  from a car  dealer, he                                                               
assumes the loan is from the dealer, not the bank.                                                                              
                                                                                                                                
1:49:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA said he thinks  that consumers aren't reading                                                               
the contract that closely, but if  the contract has a bank's name                                                               
associated  with  the interest  rate,  the  consumer will  likely                                                               
think  that's  what  the  bank  is  actually  charging.    It  is                                                               
important for the  consumer to know that the dealer  is getting a                                                               
cut, he said.                                                                                                                   
                                                                                                                                
CO-CHAIR ELKINS surmised  that the banks have gone  to the dealer                                                               
and negotiated  the rate.   He questioned  if the  consumer would                                                               
get the same rate that a dealer has negotiated.                                                                                 
                                                                                                                                
1:50:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  said there  might be  some banks  that offer                                                               
their lowest rate to a dealer.   He said if a consumer knows that                                                               
the dealer is  getting a better rate, that person  might call his                                                               
or her  bank to find  a lower rate.   "We are not  requiring that                                                               
the consumer do  anything, but we're giving the  consumer a heads                                                               
up that  maybe they might  be able to  negotiate a lower  rate on                                                               
their own.  Just a percentage  can mean an extra thousand dollars                                                               
over the course of a loan," he  said.  It is substantial money to                                                               
people living on  the margins, and they are the  ones more likely                                                               
to buy a used car, he stated.                                                                                                   
                                                                                                                                
1:52:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE THOMAS said  he always goes to the  bank before he                                                               
shops for a  car.  The dealer  often has lower rates  and he said                                                               
he doesn't mind if the dealer gets  a cut.  He said it depends on                                                               
the price of the vehicle.                                                                                                       
                                                                                                                                
REPRESENTATIVE GARA  said it is  wise to  do that, but  you would                                                               
not be harmed  if the contract provided that information.   It is                                                               
the free market,  and the more information people  have, the more                                                               
fair  it  is  to  everybody,  he  added.    By  leaving  out  the                                                               
information  the dealer  is hiding  something from  the consumer.                                                               
The consumer  may not get  a lower  rate, but full  disclosure is                                                               
fair.  "The people who get harmed  the most when they buy cars in                                                               
Anchorage are people  from outside of Anchorage who come  in.  So                                                               
they're not going to have cut  a deal with their local bank; they                                                               
might not  have a  local bank."   He said a  car dealer  told him                                                               
that dealers love it when people  from the Bush buy a car because                                                               
it is easier to mark up the price.                                                                                              
                                                                                                                                
1:54:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMAS   said  he  never  bought   a  vehicle  in                                                               
Anchorage.   He said dealers  "show you the interest  rates," and                                                               
he doesn't know how  much more upfront it can be.   He noted that                                                               
he calls his bank  but finds it is cheaper to  get a loan through                                                               
a dealer.                                                                                                                       
                                                                                                                                
1:55:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  said if you  give consumers  the information                                                               
that  the  interest  rates  are   inflated,  it  arms  them  with                                                               
information to negotiate a lower rate.                                                                                          
                                                                                                                                
REPRESENTATIVE NEUMAN  said there is  a certain amount  of credit                                                               
that  a  dealer  gets.   He  asked  if  the  car dealer  has  the                                                               
fiduciary responsibility if payments are  late.  He also asked if                                                               
the consumer fills out bank paperwork.                                                                                          
                                                                                                                                
1:56:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA  said  he didn't  know  whose  paperwork  is                                                               
filled  out but  neither the  bank nor  the dealer  discloses the                                                               
facts, the way the law is written now.                                                                                          
                                                                                                                                
1:57:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   NEUMAN   asked   again   about   the   fiduciary                                                               
responsible.  He suggested the  dealership gets a better interest                                                               
rate because  of the  volume and  the credit rating  it has.   He                                                               
said when  he was  younger he  might not  have inquired  with his                                                               
bank, but  he has learned a  few things.  But  who is responsible                                                               
for the bills if the buyer doesn't pay? he asked.                                                                               
                                                                                                                                
REPRESENTATIVE GARA said it is case by  case.  But it is not good                                                               
policy to let a  consumer be misled.  "Why would  you not want to                                                               
give the consumer  true information?"  He said even  if you are a                                                               
wise consumer,  "I guarantee you  there are used car  dealers out                                                               
there who  are implying  to the customer  that that's  the bank's                                                               
rate."                                                                                                                          
                                                                                                                                
CO-CHAIR   GATTO   said  he   believes   in   the  free   market.                                                               
Supermarkets  mark up  milk only  a  few cents,  but candies  and                                                               
magazines  are marked  up quite  a bit.   "Should  I require  the                                                               
supermarket to say 'there is a big mark up on this stuff'?"                                                                     
                                                                                                                                
1:59:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA  said  sometimes the  public  demands  fair-                                                               
pricing rules  when some  members of an  industry have  not dealt                                                               
fairly with  consumers, like insurance  rates, but  grocery items                                                               
are not regulated  because of competition and  because the public                                                               
can identify  high prices.   It is  undeniable that  some dealers                                                               
are not  truthful with  customers, he  said.   "We all  know this                                                               
goes on."   He said  on the "doc" fee  issue, "we know  that some                                                               
dealers...are convincing somebody from the  Bush that a 'doc' fee                                                               
is a  government fee, when it's  not, and that the  bank interest                                                               
rate is the one that's being  charged, when, in fact, it is not."                                                               
He said there is a level of abuse that requires this scrutiny.                                                                  
                                                                                                                                
2:00:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO asked if insurance  companies should disclose that                                                               
a better  insurance rate is  available somewhere else  instead of                                                               
having the government regulate the rates.                                                                                       
                                                                                                                                
REPRESENTATIVE  GARA  said  he  doesn't  know  the  best  way  to                                                               
regulate  the  insurance  industry,  but the  best  way  for  car                                                               
purchases is to give consumers full information.                                                                                
                                                                                                                                
CO-CHAIR GATTO  explained Representative  Gara's point  by saying                                                               
that  a consumer  would not  want to  buy groceries  at a  stated                                                               
price and then have a doc fee added on during check-out.                                                                        
                                                                                                                                
2:01:54 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  ELKINS  asked  if dealers  charge  simple  interest  or                                                               
discount interest.  That knowledge is truth in lending, he said.                                                                
                                                                                                                                
2:03:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  said he  does not  know, but  he sees  it as                                                               
annual percentage rates, not the type of interest.                                                                              
                                                                                                                                
CO-CHAIR ELKINS  said we are talking  about truth here.   He said                                                               
he  sold cars  in  the 1960s.    We  need to  know  what kind  of                                                               
interest it is, he stated.                                                                                                      
                                                                                                                                
REPRESENTATIVE GARA said  if there is a way to  be more honest to                                                               
the consumer, he would support that.                                                                                            
                                                                                                                                
2:05:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAPSNER  said that  not only  are people  from the                                                               
villages without banks more vulnerable,  but single women tend to                                                               
be at a disadvantage as well.                                                                                                   
                                                                                                                                
REPRESENTATIVE  GARA said  he  thinks he  has  seen studies  that                                                               
suggest  that car  dealers are  able to  take advantage  of women                                                               
more easily, but he is not sure of those dynamics.                                                                              
                                                                                                                                
REPRESENTATIVE KAPSNER said she has  heard that women are charged                                                               
a higher "doc" fee than men.                                                                                                    
                                                                                                                                
2:06:56 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO said he bought a  car last year and the negotiated                                                               
fee was  listed in  one place  and then in  bold letters  it said                                                               
"documentation  fees:  $200".   He  requested  that the  $200  be                                                               
deducted and  the dealer said it  can't be done.   Co-Chair Gatto                                                               
said he  was under the  impression that  the dealer could  not do                                                               
anything  about  the fee.    The  dealer  made  it seem  like  an                                                               
authorized  government fee.   The  dealer told  him, "I  can't do                                                               
anything about  it."  He said  the bill is about  deceit; we need                                                               
to  be more  open and  honest.   He  said  he has  a little  more                                                               
trouble  with the  interest provision  of the  bill.   It is  not                                                               
deceitful if the consumer knows that  the loan is through the car                                                               
dealer.   It is reasonable to  tell consumers they might  be able                                                               
to  find a  lower rate,  putting the  onus on  the buyer  to shop                                                               
around.                                                                                                                         
                                                                                                                                
2:09:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN said  he  is confused  on  "doc" fees;  "I                                                               
don't think I  really have a problem of saying  that they have to                                                               
have 'doc'  fees, but  then Representative  Gatto just  said that                                                               
normally they are there but they can't  get out of them.  So I am                                                               
not  clear on  that  one yet."    Does the  bill  just require  a                                                               
statement that there is a "doc" fee?  He asked.                                                                                 
                                                                                                                                
REPRESENTATIVE GARA  said the bill  says the price  quoted should                                                               
be  the price  charged.   The  advertised  price, the  negotiated                                                               
price, and  the price "they write  on that little piece  of paper                                                               
when they're  doing that little  paper-handing thing to  you that                                                               
they do at  car dealers," is the price they  must charge.  People                                                               
don't know what the  "doc" fee is, he said, and  they think it is                                                               
a government fee or that it is non-negotiable, which is false.                                                                  
                                                                                                                                
REPRESENTATIVE  NEUMAN said  he doesn't  think he  has a  problem                                                               
with  the  "doc" fee  provision,  but  he  is troubled  with  the                                                               
interest rate provision.  He  said Representative Gara said he is                                                               
not  supportive of  the  government telling  a  business what  to                                                               
charge, but,  "is this bill  trying to say that...the  car dealer                                                               
should say, 'well  I can give it  to you at 5 percent,  but I can                                                               
get it  at 4  percent because  I do a  lot of  volume and  have a                                                               
better  credit rating?'"    He  asked if  the  bill requires  the                                                               
dealer to provide the interest at the lower rate.                                                                               
                                                                                                                                
2:12:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  said the law  will not tell dealers  what to                                                               
charge;  they can  charge whatever  is  negotiated.   But if  the                                                               
dealers are keeping a cut and  indicating that the rate is a bank                                                               
rate,  the consumer  should be  able to  know.   Car dealers  may                                                               
worry that by  telling consumers they may be able  to get a lower                                                               
rate elsewhere, they might walk off the car lot.                                                                                
                                                                                                                                
CO-CHAIR  ELKINS said  he has  seen a  dealer giving  a potential                                                               
buyer a gallon of ice cream in  August so the buyer would go home                                                               
instead of driving around looking for a better deal.                                                                            
                                                                                                                                
2:14:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SALMON  said he goes  to the bank before  buying a                                                               
car, so at the  car lot he has that information.   A loan depends                                                               
on a  person's credit rating.   There are too many  hidden costs,                                                               
and consumers  should be  told the  full costs,  he stated.   Car                                                               
dealers  are pretty  shifty,  he  said.   The  bill provides  the                                                               
truth, he noted, and credit ratings should be included.                                                                         
                                                                                                                                
2:16:52 PM                                                                                                                    
                                                                                                                                
JIM ARPINO,  Affordable Used Cars, said  he is a board  member of                                                               
the Alaska Dealers  Association, and the information  in front of                                                               
the committee is  not the whole story.  The  people who come into                                                               
his  dealership  are  more  educated because  of  books  and  the                                                               
Internet.  Many are more  informed than the committee members, he                                                               
added.   The bill is disturbing  because it singles out  used car                                                               
dealers.   He said  "doc" fees  are charged  on new  cars, boats,                                                               
snow machines, RVs, and mortgage loans.   He said in all of those                                                               
businesses,  there  are  agreements  between  banks  and  dealers                                                               
whereby certain proceeds are kept for doing the paperwork.                                                                      
                                                                                                                                
2:19:14 PM                                                                                                                    
                                                                                                                                
CO-CHAIR ELKINS asked if the interest charged today is simple.                                                                  
                                                                                                                                
MR. ARPINO said yes.                                                                                                            
                                                                                                                                
REPRESENTATIVE SALMON asked him to explain credit ratings.                                                                      
                                                                                                                                
MR. ARPINO deferred to someone in that business.                                                                                
                                                                                                                                
REPRESENTATIVE KAPSNER  asked if all  dealers use "doc"  fees and                                                               
dealer reserve fees.                                                                                                            
                                                                                                                                
MR. ARPINO said some dealerships don't  have "doc" fees.  He said                                                               
he just bought  a snow machine and  paid a "doc" fee,  and he was                                                               
not  told it  was a  government fee.   He  said if  the committee                                                               
takes  on used  car dealers,  it  will have  to look  at all  the                                                               
businesses that operate  in the exact same fashion.   He gave the                                                               
example of a loan origination fee when buying a house.                                                                          
                                                                                                                                
2:21:34 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO asked what the fee was for the snow machine.                                                                     
                                                                                                                                
MR. ARPINO said it was $99.00.                                                                                                  
                                                                                                                                
REPRESENTATIVE NEUMAN asked how  dealers present the loan payment                                                               
information to customers.                                                                                                       
                                                                                                                                
2:22:39 PM                                                                                                                    
                                                                                                                                
MR.  ARPINO  said  the  dealer goes  over  the  prices  including                                                               
extended  service  contracts and  popular  add-ons.   The  dealer                                                               
presents the amount that will  be financed and the interest rates                                                               
and  payments.   He  said  these discussions  take  place in  the                                                               
finance department.  He explained  that the last thing that comes                                                               
out is the payment, and if  everything is acceptable to the buyer                                                               
and the seller,  the consumer signs on the dotted  line and 99.99                                                               
percent are happy  customers.  He said more  legislation will not                                                               
help the consumer.                                                                                                              
                                                                                                                                
2:24:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  asked if  current law requires  dealers to                                                               
give full disclosure of everything that the consumer pays.                                                                      
                                                                                                                                
MR.  ARPINO said  yes,  there are  good laws,  but  every time  a                                                               
constituent of a legislator has  a problem, "that person wants to                                                               
bring it up in  law."  He said the Department  of Law can protect                                                               
consumers but the consumer also needs to know how to buy things.                                                                
                                                                                                                                
2:25:28 PM                                                                                                                    
                                                                                                                                
JOHN  COOK,  General  Manager,   Aurora  Motors  and  Legislative                                                               
Director of  the Alaska Automobile Dealers  Association, said the                                                               
bill targets the  car industry only, and other  business charge a                                                               
"doc" fee, so it is not  equitable.  He added that the advertised                                                               
price of  a car  must include  everything except  licensing fees.                                                               
Regarding  finance  charges, the  bill  only  looks at  used  car                                                               
dealers,  and   there  are  many  that   provide  the  disclosure                                                               
voluntarily, he noted.   He said other  businesses receive dealer                                                               
reserves, including  electronic stores and furniture  stores, and                                                               
the bill  doesn't require  them to provide  full disclosure.   He                                                               
noted the  cut the bank  gets on mortgage rates,  which represent                                                               
larger transactions.   He referred  to Co-Chair  Gatto's example,                                                               
and said that anyone who represents  the "doc" fee as a mandatory                                                               
charge or a  government fee or is non-negotiable  is in violation                                                               
of  current law.   He  said dealers  are under  a high  degree of                                                               
scrutiny  from the  attorney  general's office.    There is  also                                                               
quite a  bit of competition, so  consumers can shop for  the best                                                               
deal  they  can  get.     Most  car  dealerships  are  family-run                                                               
businesses, and can't  operate in a way that is  not fair or they                                                               
will go out of business.                                                                                                        
                                                                                                                                
2:31:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO said  he will  try to  recover the  money he  was                                                               
illegally charged.                                                                                                              
                                                                                                                                
2:33:04 PM                                                                                                                    
                                                                                                                                
ED SNIFFEN, Assistant  Attorney General, Commercial/Fair Business                                                               
Section, Department of Law, said he  is one of the authors of the                                                               
statute that  is being amended  by HB 383.   He said  being armed                                                               
with information prior to visiting  a car dealership is terrific,                                                               
but  the statute  is  aimed at  consumers who  do  not have  that                                                               
information.    Uneducated consumers  will  be  protected by  the                                                               
hold-back portion of  the bill.  Negotiating the price  for a car                                                               
is unique and  not done for milk,  he said, and it is  a very big                                                               
deal for  consumers because the price  of cars is high.   He said                                                               
it  is normally  the second  largest purchase  consumers make  in                                                               
their entire lives.  The process can be intimidating, he added.                                                                 
                                                                                                                                
MR.  SNIFFEN said  when a  seller goes  back into  some room  and                                                               
comes back and says, "good news,  I can finance you for this much                                                               
money," the perception  of the consumer is that that  is the rate                                                               
he or  she can get.   The process does make  the consumer believe                                                               
that the  rate the dealer can  give is the rate  the consumer can                                                               
get.   He  said the  previous testifiers  are reputable  dealers.                                                               
Other industries are  regulated in different ways,  and one can't                                                               
compare other  industries with the automobile  industry.  Dealers                                                               
get interest  rates from  the bank,  then the  dealer is  free to                                                               
charge whatever  they want, and  he is  not sure that  freedom or                                                               
flexibility  is  true  for other  industries.    The  negotiation                                                               
process is so unique, he said.   The federal Truth in Lending Act                                                               
deals with  a finance charge, not  interest.  It does  not matter                                                               
what  kind  of interest,  what  matters  is  that the  dealer  is                                                               
holding back something and making a profit, he said.                                                                            
                                                                                                                                
2:38:38 PM                                                                                                                    
                                                                                                                                
MR. SNIFFEN said  there is no fiduciary  relationship between the                                                               
dealer and  the customer.  He  said most Alaskan car  dealers are                                                               
reputable, "but if  they can tweak more money out  of you..."  He                                                               
suggested not  relying on car  dealers to  look out for  the best                                                               
interest  of  consumers  because  of their  profit  motive.    In                                                               
dealing with deceptive dealers, it  is difficult for the state to                                                               
enforce anything that is not in writing, he said.                                                                               
                                                                                                                                
2:40:13 PM                                                                                                                    
                                                                                                                                
MR.  SNIFFEN  said  some  dealers   make  "doc"  fees  look  like                                                               
government fees and some don't.   The laws target the dealers who                                                               
are  less than  honest.   The  language in  statute requires  the                                                               
"doc" fee  to be included in  the advertised price, he  said, but                                                               
as soon  as a price is  negotiated, the "doc" fee  will get added                                                               
back in, "and it  was never our intent to have  that be the case,                                                               
so I think changing that would fix that loophole."                                                                              
                                                                                                                                
CO-CHAIR GATTO asked if the bill refers only to used vehicles.                                                                  
                                                                                                                                
2:41:25 PM                                                                                                                    
                                                                                                                                
MR. SNIFFEN said it would apply  only to used vehicles, but there                                                               
is no reason to not include all motor vehicles.                                                                                 
                                                                                                                                
CO-CHAIR  GATTO said  he  will amend  the title  of  the bill  to                                                               
delete the word "used".                                                                                                         
                                                                                                                                
CAROL  LYBERGER, Lyberger  Car  and Truck  Sales,  said the  auto                                                               
industry is  very well regulated.   She added that  Wells Fargo's                                                               
contract  states  that the  seller  may  receive  a part  of  the                                                               
finance charge, and she gave other examples of such disclosures.                                                                
                                                                                                                                
CO-CHAIR  GATTO asked  if the  bill would  negatively affect  the                                                               
ability to sell cars or is simply redundant to what is done now.                                                                
                                                                                                                                
MS. LYBERGER said it would be  redundant and would not affect her                                                               
ability to sell cars.                                                                                                           
                                                                                                                                
CO-CHAIR  GATTO said  there is  a substantial  stack of  paper to                                                               
sign when buying a car, and he asked if buyers read them all.                                                                   
                                                                                                                                
MS.  LYBERGER  said most  legitimate  dealers  have good  finance                                                               
staff who can  explain the finance charge, and  the consumer pays                                                               
a lot of attention to those charges.                                                                                            
                                                                                                                                
2:45:50 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO spoke  of extending  the contract  to make  lower                                                               
monthly payments.                                                                                                               
                                                                                                                                
MS. LYBERGER said the salesperson does not talk about finance.                                                                  
                                                                                                                                
CO-CHAIR  GATTO   asked  if  the   salesperson  only   gives  the                                                               
negotiated price and doesn't talk about financing or "doc" fees.                                                                
                                                                                                                                
MS. LYBERGER  said her vehicles  have the  price on the  car, and                                                               
the sales  person writes  up the description  of the  vehicle and                                                               
the price, and then the buyer goes to the sales manager.                                                                        
                                                                                                                                
CO-CHAIR GATTO asked if her prices are non-negotiable.                                                                          
                                                                                                                                
MS. LYBERGER said there is always negotiating.                                                                                  
                                                                                                                                
2:48:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   ELKINS  asked   about   dealers   without  a   finance                                                               
department.                                                                                                                     
                                                                                                                                
MS. LYBERGER said all dealerships she knows of have one.                                                                        
                                                                                                                                
CAROLYN  ALLEN,  Business   Development  Director,  Auto  Service                                                               
Company, Fairbanks, said  her concerns are the same  as the other                                                               
dealers that  testified.  She  said she  sells both new  and used                                                               
cars so she is opposed to the suggested amendment.                                                                              
                                                                                                                                
CO-CHAIR GATTO said  a motor vehicle can be a  lawn mower, and he                                                               
wondered if a motor vehicle should be defined.                                                                                  
                                                                                                                                
MR. SNIFFEN said the term is defined in the bill appropriately.                                                                 
                                                                                                                                
2:51:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN  said  snowmobiles   are  required  to  be                                                               
registered with the Department of Motor Vehicles.                                                                               
                                                                                                                                
MR. SNIFFEN said he does not have  a copy of the statute, but the                                                               
term is already defined, and  by changing the definition the bill                                                               
may inadvertently implicate other statutes.                                                                                     
                                                                                                                                
CO-CHAIR  GATTO  suggested  defining   motor  vehicles  as  being                                                               
primarily used on highways.                                                                                                     
                                                                                                                                
MR. SNIFFEN said the definition  addresses that, and changing the                                                               
definition will affect  more than desired.  He said  he will have                                                               
to look at  it, but he believes the definition  just covers cars,                                                               
trucks and motor homes, and he is  not sure if it applies to snow                                                               
machines and all-terrain vehicles.                                                                                              
                                                                                                                                
2:53:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SALMON suggested  adding the  words "new  and" to                                                               
the bill.                                                                                                                       
                                                                                                                                
MR. SNIFFEN said it was better to delete the term "used".                                                                       
                                                                                                                                
REPRESENTATIVE SALMON said  the word "used" is used on  page 2 as                                                               
well as the title.                                                                                                              
                                                                                                                                
2:55:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SALMON offered to  adopt Conceptual Amendment 1 to                                                               
delete the  term "used"  from the  bill in  order to  include new                                                               
cars in the legislation.                                                                                                        
                                                                                                                                
REPRESENTATIVE NEUMAN objected for purposes of discussion.                                                                      
                                                                                                                                
MR. SNIFFEN said new car dealers  are faced with the same issues,                                                               
and there is no reason to exclude new vehicles.                                                                                 
                                                                                                                                
CO-CHAIR GATTO said he agrees.                                                                                                  
                                                                                                                                
REPRESENTATIVE  NEUMAN  withdrew  his   objection.    Hearing  no                                                               
further objections, Conceptual Amendment 1 carried.                                                                             
                                                                                                                                
REPRESENTATIVE KAPSNER offered Amendment  2, as follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Page 2, lines 23-29                                                                                                        
          Delete all material.                                                                                                  
          Insert:                                                                                                               
               "(f) In addition to the other requirements                                                                       
          of  this  section,  if   a  motor  vehicle  dealer                                                                    
          arranges  financing  for  a  proposed  buyer,  the                                                                    
          dealer must  disclose in  writing, and  before the                                                                    
          sale is finalized:                                                                                                    
                    (1) whether the interest rate quoted to                                                                     
               the proposed buyer is different than the                                                                         
               interest rate charged to the dealer, and                                                                         
                    (2) the interest rate quoted to the                                                                         
               buyer may not be the lowest interest rate                                                                        
               available."                                                                                                      
                                                                                                                                
2:58:12 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO said he objected  because the existing language is                                                               
better and not as specific.                                                                                                     
                                                                                                                                
REPRESENTATIVE KAPSNER said she wants  Mr. Sniffen to discuss her                                                               
amendment, and she thinks it makes the bill clearer.                                                                            
                                                                                                                                
CO-CHAIR GATTO described Amendment 2 to Mr. Sniffen.                                                                            
                                                                                                                                
REPRESENTATIVE GARA said Mr. Sniffen worked on the amendment.                                                                   
                                                                                                                                
3:00:11 PM                                                                                                                    
                                                                                                                                
MR. SNIFFEN  said he remembers  his intent for  writing Amendment                                                               
2.  It  was to clarify the legislation, but  the current language                                                               
accomplishes what the bill is after.   He said he was just trying                                                               
to clean it up and make it easier to follow.                                                                                    
                                                                                                                                
CO-CHAIR  GATTO said  he maintains  his objection  because he  is                                                               
concerned that it doesn't say anything different.                                                                               
                                                                                                                                
3:01:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA said  Amendment 2 would add  that "the dealer                                                               
would have to disclose if they  were taking a cut, whereas the CS                                                               
doesn't have that part."                                                                                                        
                                                                                                                                
CO-CHAIR GATTO noted that the  CS requires dealers to advise that                                                               
the interest  rate may be  different, and [Amendment  2] requires                                                               
dealers  to say  it is  different.   He maintained  his objection                                                               
based on his support for the "free market system."                                                                              
                                                                                                                                
MR. SNIFFEN said his intent with  Amendment 2 was to have dealers                                                               
only  disclose the  difference in  interest rates  if there  is a                                                               
difference.  He  said the current version of the  bill requires a                                                               
disclosure whether  there is  a difference or  not, he  said, and                                                               
why should  a dealer disclose  it if they  are not taking  a cut?                                                               
So if the dealer is offering the  same rate as the bank, there is                                                               
no obligation  to disclose  anything, he  said.   That is  why he                                                               
thinks the language does  the job, he said, but he  is not wed to                                                               
either version.                                                                                                                 
                                                                                                                                
3:04:10 PM                                                                                                                    
                                                                                                                                
A roll  call vote  was taken.   Representatives  Kapsner, Salmon,                                                               
and Elkins voted in favor  of Amendment 2.  Representatives Gatto                                                               
and Neuman voted against it.   Therefore, Amendment 2 passed by a                                                               
vote of 3-2.                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAPSNER  moved to  report CS  HB 383,  version 24-                                                               
LS1287\S, Bannister,  2/3/06, as  amended, out of  committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
Hearing  no objection,  CSHB 383  (TRA) passed  out of  the House                                                               
Transportation Standing Committee.                                                                                              
                                                                                                                                

Document Name Date/Time Subjects