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Frequently Asked Dealers Questions *** Questions and cited references are provided for information only *** *** If you have further questions or a need a legal opinion, consult an attorney ***
Q: What is definition of a Motor Vehicle Dealer in Hawaii? A: HRS 437-1.1 "Dealer"...any person...who sells three or more vehicles within a calendar year, or who is engaged in the business of selling, soliciting, offering, or attempting to negotiate sales, purchases, or exchanges of motor vehicles or any interest therein, including options to purchase motor vehicles." (Individuals selling more than two cars a year should be reported to the Regulated Industries Complaints Office at 808-587-3222) A: Not according to HRS 437-4 Advertising (1)(c) which states "No new or used motor vehicle dealer shall advertise the sale of a specific motor vehicle without setting forth:
(A) The year; (B) The make of the motor vehicle; and (C) In the case of a used car, the license plate number of the motor vehicle."
Q: Is is illegal to park a vehicle for sale on a public roadway? A: Yes, according to the City and County of Hononlulu "Revised Ordinances of Honolulu, Chapter 15 Traffic Code, Sec. 15-14.7 Parking for certain purposes prohibited. No person shall park a vehicle upon any roadway for the principal purpose of:
(a) Displaying such vehicle for sale; or
(b) Washing, greasing or repairing such vehicle, except repairs necessitated by an emergency. (Non-emergency 911 police complaints will result in a citation being issued to the vehicle)
Q: What is the maximum interest rate a buy-here-pay-here dealer can charge in Hawaii? A: 24 percent. HRS 476-28 Regulation of finance charges,(2) "...a seller may contract for and receive a finance charge at a rate not exceeding twenty-four per cent a year on the principal balance remaining unpaid..."
Q: How long after a dealer moves does it have to notify the state? A: 15 days. HRS437-27 Change of status requires "any licensee changes during the period for which the license is issued in respect to:
(1) Changes in officers, directors, or limited partners of the licensee or termination of the employment of any licensed salesperson;
(2) The transfer of more than ten per cent of the ownership of the licensee to one person;
(3) The termination of a licensed premises by a dealer or auction or the acquiring or termination of a franchise; or
(4) The assignment of any part of the licensee's assets for the benefit of creditors; the licensee shall within fifteen days thereafter file with the board notice of such change containing such information as may be required by the board; provided that nothing contained in this section shall limit the power of the board to suspend, revoke, or deny the renewal of such license or impose any other penalty authorized by this chapter."
Q: What are the warranty requirements for used vehicles sold in Hawaii? A: HRS 481J-2 Used motor vehicles: written warranty required, terms. (a) No used motor vehicle shall be sold in this State by a dealer to a consumer unless accompanied by a written warranty covering the full cost of both parts and labor necessary to repair any defect or malfunction in a part covered under subsection (c) that impairs the used motor vehicle's safety or use. Defects and malfunctions that affect only appearance shall not be deemed to impair safety or use for the purposes of this chapter.
(b) The written warranty shall apply for the following durations:
(1) For a used motor vehicle which, at the time of sale, has been operated less than twenty-five thousand miles, the warranty shall be a minimum of ninety days or five thousand miles, whichever occurs first. This ninety days or five thousand mile warranty is in addition to any rights the consumer may have under chapter 481I;
(2) For a used motor vehicle which, at the time of sale, has been operated twenty-five thousand miles or more, but less than fifty thousand miles, the warranty shall be a minimum of sixty days or three thousand miles, whichever occurs first; and
(3) For a used motor vehicle which, at the time of sale, has fifty thousand miles or more but no more than seventy-five thousand miles, the warranty shall be a minimum of thirty days or one thousand miles, whichever occurs first.
Q: What is covered by the warranty? A: HRS 481J-2 (c) The written warranty shall require the dealer or its agent to repair or, at the election of the dealer, reimburse the consumer for the reasonable costs of repairing the failure of a covered part. Covered parts shall at least include the following items:
(1) Engine, including all lubricated parts, water pump, fuel pump, manifolds, engine block, cylinder head, rotary engine housings, flywheel, gaskets, and seals;
(2) Transmission, including the transmission case, internal parts, torque converter, gaskets, and seals, except four-wheel drive vehicles shall be excluded from coverage as provided for in this paragraph;
(3) Drive axle, including front and rear drive axle housings and internal parts, axle shafts, propeller shafts, and universal joints, except four-wheel drive vehicles shall be excluded from coverage as provided in this paragraph;
(4) Brakes, including master cylinder, vacuum assist booster, wheel cylinders, hydraulic lines and fittings, and disc brake calipers;
(5) Radiator;
(6) Steering, including the steering gear housing and all internal parts, power steering pump, valve body, piston, and rack; and
(7) Alternator, generator, starter, and ignition system, excluding the battery.
Q: Can dealers in Hawaii sell cars using rent-to-own financing? A: Lease-purchase agreements (rent-to-own) are exempt from HRS 481M-3 paragraph (4) and are therefore not allowed under the laws that permit rent-to-own. HRS 481L applies to motor vehicle leases. Q: What are bond or line of credit requirements for a motor vehicle dealer license? A: HRS 437-7 (d) Requirement for lines of credit shall be as follows:
(1) Applicants for issuance of a dealer's license shall obtain an inventory or flooring line of credit from a federally insured financial institution or from a financing source having a net worth of at least $50,000,000. The line of credit shall be in the following amount:
(A) For new motor vehicle dealer applicants, $500,000 or the amount required in the applicant's dealer sales and service agreement, whichever is less;
(B) For used motor vehicle dealer applicants, $50,000; and
(C) For new and used motorcycle and motor scooter dealer applicants, $50,000;
HAR 16-86-12 Alternative form of security. (a) Where an inventory or flooring line of credit cannot reasonably be obtained by a dealer, the board may provide that a bond, for one of the following amounts, be obtained as an
alternative form of security:
(1) $200,000 for new vehicle dealers selling ten or more new motor vehicle units a month on an annual basis;
(2) $50,000 for new vehicle dealers selling less than ten new motor vehicle units per month on an annual basis;
(3) $100,000 for used motor vehicle dealers selling sixty or more motor vehicle units per month on an annual basis;
(4) $25,000 for a used motor vehicle dealer selling less than sixty units a month on an annual basis; and
(5) $10,000 for motorcycle and motor scooter dealers.
(b) More than one bond may be furnished by the same applicant, provided they aggregate the full amount prescribed by this section.
86-4
*** Questions and cited references are provided for information only *** *** If you have further questions or a need a legal opinion, consult an attorney *** |
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