How To Start and Comply To be a Buy Here, Pay Here Used Car Dealership

Cars parked outside of a dealership

Buy Here, Pay Here can be very lucrative and helpful for your clients, but how do you do it right? It’s complex but not impossible. In this article, you’ll find some helpful resources on what the law requires and how to stay in compliance.

Contract Details:

  1. Title Research and Vehicle Information:
    • In accordance with Florida Statute 319.23, conduct an exhaustive title search through the Florida Department of Highway Safety and Motor Vehicles (DHSMV) to confirm the vehicle's title is free of liens and encumbrances. This includes checking for any outstanding loans or judgments against the vehicle.
    • Per Florida Statute 501.976(3)(a)(2), collect comprehensive vehicle details, including the VIN, make, model, year, mileage, color, condition, any aftermarket modifications, and a thorough history of repairs or accidents if available. Utilize resources like Carfax reports to gather this information accurately.
  1. Compliance with Florida Laws:
    • Florida's BHPH laws, as outlined in Florida Statute 516, can be intricate and subject to change. Ensure that you're well-versed in the latest regulations by regularly consulting the Florida DHSMV and the Florida Office of Financial Regulation (OFR).
      • Licensing: Verify that your dealership holds the necessary licenses and permits, including the Motor Vehicle Retail Installment Seller License issued by the OFR, as required by Florida Statute 520.02.
      • Interest Rates: Comply with the maximum allowable interest rates as specified by Florida law, which can vary based on the vehicle's selling price and term of the contract, as per Florida Statute 520.08. Keep detailed records of interest calculations.
      • Disclosure Requirements: Adhere to stringent disclosure regulations, including the requirement to provide buyers with a written statement of their rights under the Florida Consumer Collection Practices Act, as mandated by Florida Statute 559.72.
  1. Detailed Contract Components:
    • Parties Involved: Explicitly identify the dealership, the buyer, and any co-signers, as required by Florida Statute 520.08(1)(a). Include full contact information for each party, including addresses and phone numbers. Ensure that each party has a clear understanding of their obligations and rights.
    • Vehicle Details: Beyond basic information, provide a detailed description, including the vehicle's specifications, features, and any unique selling points. Mention any aftermarket additions or modifications and document their condition thoroughly.
    • Purchase Price Breakdown: Clearly itemize the total purchase price. This should include the vehicle's cost, down payment, applicable taxes, title and registration fees, dealer fees, and any extended warranties or insurance, in accordance with Florida Statute 520.08(1)(b). Provide a breakdown of how these costs are calculated.
    • Payment Terms: Specify the payment frequency (e.g., weekly, bi-weekly, or monthly), the exact due date for each payment, and any grace period allowed for late payments, as mandated by Florida Statute 520.08(1)(c). Include information on accepted payment methods, such as cash, check, or electronic transfer.
    • Interest Rate and Calculation Method: Provide a comprehensive explanation of how the interest rate is calculated, including the compounding method and the exact annual percentage rate (APR). Ensure strict adherence to Florida's usury laws, which set limits on the maximum interest rate that can be charged, as per Florida Statute 687.03.
    • Late Fees and Penalties: Detail the late fee structure, when it applies, and under what circumstances, as required by Florida Statute 520.08(1)(d). Clarify any penalties or additional charges for late or missed payments, and ensure they are in line with Florida regulations.
    • Default and Repossession Clauses: Elaborate on the conditions under which the contract may be considered in default, including specific triggers such as missed payments or breach of contract terms. Outline the step-by-step process and timelines for repossession, ensuring strict compliance with Florida's repossession laws, which require notice to the buyer prior to repossession, as per Florida Statute 537.012.
    • Insurance Requirements: If mandatory, provide an exhaustive description of insurance requirements, including minimum coverage limits, acceptable insurers, and any additional coverage mandates, in accordance with Florida Statute 520.08(1)(e). Clearly explain how insurance premiums will be handled within the contract.
    • Warranties and As-Is Statement: Clearly state whether the vehicle is sold with any warranties, in compliance with Florida Statute 520.08(1)(f). If warranties are offered, explain their terms, coverage, and duration in meticulous detail, ensuring compliance with Florida's implied warranty laws, as outlined in Florida Statute 672.315.
    • Cancellation Policy: Outline the buyer's right to cancel the contract within the legally mandated period, including the procedure and any associated costs, in accordance with Florida Statute 520.08(1)(g). Florida law provides a three-day right of rescission for BHPH contracts.
    • Notices and Disclosures: Ensure that the contract incorporates all necessary notices and disclosures, including the Federal Buyer's Guide for used cars, safety recalls, and any state-specific requirements, as mandated by Florida Statute 501.976(3)(b). Additionally, provide information about the buyer's right to request a copy of their credit report if the contract involves credit reporting, as required by the Fair Credit Reporting Act.

Compliance and Reporting Details:

  1. Legal Review and Compliance:
    • Engage a specialized attorney with expertise in Florida's BHPH laws for a comprehensive contract review, ensuring full compliance with current state laws and regulations, including those specified in Florida Chapter 516. Regularly consult legal counsel to stay updated on any changes in legislation.
  2. Document Signatures and Notarization:
    • Require all parties, including co-signers, to sign the contract in the presence of a notary public for authentication, as per Florida notary laws outlined in Florida Chapter 117.
  3. Record Keeping and Transparency:
    • Maintain meticulous records, both in physical and digital formats, including signed copies of contracts, payment receipts, and any written communications relevant to the contract. Keep records for the entire duration of the contract and beyond as required by Florida law.
    • Foster transparency by promptly addressing any inquiries or concerns raised by the buyer during the contract period. Maintain open lines of communication and document any resolutions or agreements reached.
  4. Compliance Reporting and Updates:
    • Familiarize yourself with reporting obligations to state authorities, including the Florida Office of Financial Regulation, as specified in Florida Statute 520.06. Ensure that reports are submitted accurately and on time and keep records of all submitted reports.
    • Regularly monitor your BHPH operations and remain flexible to update your contracts as needed to align with any changes in state regulations. Stay informed about updates or amendments to Florida's BHPH laws and incorporate them into your business practices promptly.

Incorporating these extensive contract details and complying with Florida's intricate legal requirements, as cited in the relevant statutes, is crucial for the success and legal integrity of your Buy Here Pay Here dealership. Maintain a commitment to transparency, accuracy, and legal compliance in all aspects of your operations to ensure the trust and satisfaction of both your buyers and regulatory authorities.

About the Author:

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Description automatically generated Chase Carpenter is a partner in the Business Division of Law Offices of Moffa, Sutton, & Donnini, P.A.. His practice revolves around business transactions and business litigation. Mr. Carpenter handles a wide range of cases including contract drafting, partnership disputes, commercial leases, and construction litigation. These cases encompass diverse industries, including healthcare, technology, real estate investment, and government contracting.

About the Firm:

The Law Offices of Moffa, Sutton, & Donnini, P.A., also known as MSD Business, is a local business law firm in Tampa, FL, serving clients throughout Fort Lauderdale and statewide. Our firm has a long history of helping clients navigate all types of complex legal matters, including local and state tax issues. In our business law practice, we assist clients with everything from mergers and acquisitions to contract disputes, business litigation, general counsel, and more.

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