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CFPB: BHPH Dealer to Pay $800,000 for Abusive Financing Practices

January 21, 2016

WASHINGTON, D.C. — The Consumer Financial Protection Bureau has taken action against Herbies Auto Sales for abusive financing schemes, hiding auto finance charges and misleading consumers. The buy-here, pay-here dealership will be required to pay $700,000 in restitution and a civil penalty of $100,000.

Herbies will also be required to cease their deceptive practices and properly represent interest rates, finance charges, amounts financed, and any fact material concerning financing of a motor vehicle. Additionally, the dealership will need to clearly and prominently post the purchase price on all vehicles for sale when its offering auto financing, and must give the actual APR and price of the car. Customers will then need to sign an acknowledgement confirming they received all the required information before or at the time of receiving a financing offer.

“Buying a car is often one of the most important purchases a consumer makes, so the experience needs to be fair and above-board,” said CFPB Director Richard Cordray. “But concealing finance charges and the real cost of credit, as Herbies did here, is unlawful and unacceptable.”

Y King S Corp, which does business as Herbies Auto Sales in Greeley, Colo., operates as a dealer that sells both the car and originates the auto loan without selling that loan to a third party. From 2012 through May 2014, the dealer offered financing to about 1,000 customers.

Herbies unlawfully advertised a misleadingly 9.99% APR without disclosing the required repair agreement, the payment assurance device equipping the vehicles and other credit costs as finance charges. This helped the company convince consumers that they would get the 9.99% APR, while in reality they were getting a much higher rate.

The company hid $1,650 for a required repair agreement and $100 for a required GPS payment reminder device in the finance charges. It refused to negotiate prices with credit customers but accepted negotiations with cash customers.

According to the CFPB, these abusive practices that lured consumers and kept them in the dark about the true cost of the financing their vehicle were in violation of the Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act.


  1. 1. howell clark [ January 22, 2016 @ 09:42AM ]

    ok they corrected a bad dealer are they going to make it even more difficult for credit challenged folks to buy a car. they have already scared the banks away form smaller indirect dealers and from participation and several out of indirect lending at all. bad consequences for good intentions does not make a right.

  2. 2. Sheldon Wolff [ January 23, 2016 @ 09:21AM ]

    There are so many clandestine dealers out there. The crappy credit buyers know they have bad or non existent credit. They know they will have to pay a higher rate than mainstream buyers. It's a higher risk loan. But it's no excuse not to inform these individuals that they are paying a higher rate, disclosure is paramount. A sub prime loan is a great way to re establish or to establish viable credit. To take advantage of buyers is wrong. They're all adults , they know they can't get regular financing, tell the truth.

  3. 3. Nelson Mac [ February 29, 2016 @ 11:23PM ]

    Good day everybody my name is Nelson Mac am from Sweden but i live in United State San Antonio Texas few years back i was financially strained i rushed to my bank to apply for a loan to start up my business but i was denied by my bank because of my credit score and they could not help and due to my desperation i was scammed by several online lenders who promised to help me but at the end i was scam i lost my money and my hope because i was so frustrated, One day when i was going through the internet again i found one lender call Mr Larry Scott i thought to give it a try one more time to my biggest surprise he was able to lend me a secure loan totally the amount of $200,0000 for the first time in my life i realize that there are few lender who don't scam people his name is Mr Larry Scott i will advice any body that are in need of loan to contact him with his Email ( he can be able to help you because he was a God sent to me this year and i will never forget him for the help he render to me.

    God bless him

    Nelson Mac

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