Auto Loan Rates Higher For Blacks

(AP)  Blacks have been charged higher auto loan rates than other auto buyers, federal research says. But the gap in loan rates could narrow, and possibly disappear, as the result of recently concluded lawsuits.

Blacks paid a typical auto loan rate of 7 percent for new cars, compared with a rate of 5 percent for whites in 2004, according to a consumer organization's analysis of the Federal Reserve Survey of Consumer Finances. That was the most recent survey available.

And blacks were more likely than auto buyers in general to have auto loan rates higher than 15 percent. For used car loans, 27 percent of blacks who buy cars were charged interest rates of 15 percent or more. Blacks were three times as likely as whites — 27 percent to 9 percent — to have auto loan rates at least that high, according to the report released Monday.

Hispanics were paying a typical rate of 5.5 percent for new car loans, while 19 percent of Hispanics had loans for used cars over 15 percent, the analysis found.

Lenders' suggested quote rates are based largely on the buyer's credit history, but auto dealers often raise the rate higher than that risk-related rate without discussing the rate with the customer, consumer advocates said. And they question the causes of those rate differences.

"It's hard to believe that any differences in creditworthiness explain all of these rate gaps," said Stephen Brobeck, executive director of the Consumer Federation of America. "They size you up, the car salesmen and finance and interest guys. They must think African-Americans are more vulnerable to a markup."

But a series of legal actions against auto finance firms seeking fair treatment for minorities could help solve that problem.

"We had 11 lawsuits, the last of the cases settled last month," said Stuart Rossman of the National Consumer Law Center. "We reached a settlement with each of the finance firms. Our cases involved discrimination. We believe the terms of the settlements will eliminate discrimination."

The first of the lawsuits was filed in 1998 in Nashville, Tenn., against General Motors Acceptance Corporation and was settled in 2004. The last settlement became final in April.

The effects of those legal actions may not be known for some time, however.

The National Auto Dealers Association questioned what accounts for the rate differences, but encouraged auto buyers to do their homework before going to buy a car.

"The question that still is unanswered is why," said David Hyatt, a spokesman for the dealer's association. "People should do their homework and shop around. It speeds up the transaction, makes for a smoother transaction and is more likely to result in a satisfied buyer."

Hyatt said an organization supported by the auto dealers, Americans Well Informed on Automobile Retailing Economics (AWARE), offers tips to potential car buyers.

Chris Stinebert, president and chief executive of the American Financial Services Association, said his group is interested in educating consumers.

"AFSA and its members believe there is no place for discrimination in the vehicle financing system," he said.

The lawsuit settlements against auto finance companies call for caps on dealer markups, opportunities for blacks and Hispanics to get loans with no markups within the next few years, more information about interest rate terms and consumer education for minorities.

"The lower markup caps have leveled the playing field," Rossman said.

Consumer advocates say prospective auto buyers should call their bank or credit union for a rate quote to expect on an auto loan. That could protect them from unfair markups.

Other ways to hold down costs:

Make all loan payments on time.

Buy a used car, or a less expensive new car.

Take out a loan over a shorter time.

The survey of 4,519, including 605 blacks, was analyzed by Catherine Montalto, a consumer specialist at Ohio State University for the Consumer Federation of America. The survey was conducted between May and December of 2004.

[klingon69]

Thus their view of blacks will be tainted and biased. One black man does something wrong, and all blacks are counted as guilty.
Gib

Posted by mgibson17 at 02:53 AM : May 08, 2007

What happens when you are a white family living in an almost all-black neighborhood? My family and I know well about racism, discrimination...etc:
How about the young gangs that would love to egg my house and car, throw rocks, sticks & bottles at my wife and son.
How about the black youths that broke into my backyard and stole 5 puppies, killed one dog and injured another almost to the point of a broken jaw.
How about the black family who called the cops (who threatened to arrest me) because I wouldn't give their boy my sons scooter.
How about the group of young black hoodlums who break the windows in myhouse
It is very difficult to experience these things and others without being prejudice, but I did have some very good friends(black) who used to come over to bar-b-q with us, or sit on the porch and drink some beer. but, unfortuneately they were the exception, not the rule. BTW, when I called the cops against one of these hoodlums, they told me they wouldn't arrest them because they feared a riot would occur.

[vmcneal2]

People with bad credit black or white get higher interest rates. But I've seen credit apps with similar income, similar time on job, similar debt to income ratio, buying a similar car and the white applicant was approved at a higher tier(lower interest rate)than the black applicant. The big difference was the address of the applicants. (city vs burbs)The bank involved in this situation just happen to be one of the banks that got sued.

[whatithink-2009]

I DO NOT BELIEVE that racism is a reason for black people to give up and it is still a black person's responsibility to fight against it.

I DO BELIEVE that there are still many racist whites in our country, which would not normally bother me IF these same people did not have power over our our judicial system, our economic system, our political system, etc.

I DO NOT BELIEVE that someone who is a racist can deal fairly with people who they are racist against.

Until you walk a mile in my shoes, you have no right to question my experiences.

[whatithink-2009]

dogsoul wrote:

"black people LOVE when people refer to them, they, those people etc..."

- Have you started a survey to ask what black people think? Frankly, you have several black people here and instead of you telling us what we think, why not start asking????

I have NEVER professed to be able to speak for ALL BLACK PEOPLE.

I DO NOT attend regular meetings with the 12% of the population that are considered African American to align on what we are supposed to think.

I DO KNOW many black people who have had disagreements with each other on every topic under the sun, so if we are supposed to be working from the same CPU, somebody forgot to tell them!

I DO KNOW that there are social problems within the United States and people of African origins have a fair share of them.

I DO BELIEVE that BOTH blacks and whites have many issues left over from slavery THAT BOTH need to OVERCOME! Racism played a prominent part within our country from 400 years. It will probably take another 400 years to recover from it.

[dogsoul]

Like I said... black people LOVE when people refer to them, they, those people etc when it's a matter of making excuses for their behavior, when it comes to fawning admiration for them, when it comes to long dissertations about how they've been oppressed by the white man - heck, black people WANT to and will refer to THEMSELVES in such a unified manner whenever the above mentioned is discussed...

So it's all well & good to collectively refer to black people so long as you're talking about their stuggle against white racism & how it accounts for all of their woes or when you're speaking in some glowing terms... but you're NOT allowed to talk about the black community's negative issues such as have been brought up by well known black artists like Bill Cosby & Chris Rock - do I got that about right? And why??? Oh yeah... because I'm white - and racists like yourself might, heaven forbid, point the racist finger at me... oh no, not that! Whatever... it's attitude like yours that will continue to keep the black man down -

Seems I expect much more from black people than they do themselves - because unlike YOU - I think they're plenty capable of taking care of themselves.

[dogsoul]

"How many white people do you know with the last name Washington or Jefferson? "

Couple a couple guys named George & Thomas... but that's about it....

[vmcneal2]

Credit applications do not ask for race but they do ask for an adddress and zip code. There are also other ways to tell the race of a person on a credit application whithout seeing that person one on one. How many white people do you know with the last name Washington or Jefferson? Car dealerships are the worse.Dealerships often to not treat black customers and white customers the same. I know what I'm talking about because I work in the car business and I see what happens first hand.

[krenz4]

Dogpile,
Keep yapping. Your own words reveal your racist views and ideas. "They, them, those people, you are proving why stuff like this happens. Black people dont need, or want your pity,or that of the media either. You know NOTHING of the Black community beyond that you want to see or believe. Or what you saw on TV. I dont speak for the Black community , but all I want for you to do is see what is before your own eyes. You, yourself, in your own words have made the divisions clear, by your use of "They", "Them", "Those",While referring to a whole race of people, as if none of "US" has any brains, or credit, or sense of responsibility! And by the way, Black Folks did not commission or perform this study. Most Black folks could have told you how it is in this country and we could have done it without spending millions we could have provided the info for free! We deal with A holes like you everyday, and lots of US, Black and White, see what is in the hearts of people like YOU.

[dogsoul]

"Whew, Dogsoul, You are a classic example of what is going on in this country. Look how you have painted "blacks" with the same brush... "

Funny... when it comes to feeling sorry for them, or talking about how their being oppressed, or celebrating their culture - nobody has any problem whatsoever talking about the "black community" - but the moment you bring up ANYthing negative, or even controversial... and you're a "racist".

First of all - it's really not about race with me... it's culture - and to deny there is such a thing as "black culture" or a "black community" is not ONLY to deny reality, but it would probably really tick off many black people. Let's face it, we hear about the "black community" from black people & white liberals all the time... so why IS it that we're only allowed to reference that culture in one of two ways:

1 - fawning admiration
2 - pity

everything else gets your the big "racist" label

Aren't they capable of handling the kind of scrutiny EVERY other culture gets? Including the American culture? What makes THEM so incapable?

I like a lot about black culture, but I have an issue with their lack of accountability & those white liberals who enable that aspect to the detriment of black people - and this article as well many comments illustrates my point perfectly.

[dogsoul]

"Whew, Dogsoul, You are a classic example of what is going on in this country. Look how you have painted "blacks" with the same brush... "

Funny... when it comes to feeling sorry for them, or talking about how their being oppressed, or celebrating their culture - nobody has any problem whatsoever talking about the "black community" - but the moment you bring up ANYthing negative, or even controversial... and you're a "racist".

First of all - it's really not about race with me... it's culture - and to deny there is such a thing as "black culture" or a "black community" is not ONLY to deny reality, but it would probably really tick off many black people. Let's face it, we hear about the "black community" from black people & white liberals all the time... so why IS it that we're only allowed to reference that culture in one of two ways:

1 - fawning admiration
2 - pity

everything else gets your the big "racist" label

Aren't they capable of handling the kind of scrutiny EVERY other culture gets? Including the American culture? What makes THEM so incapable?

I like a lot about black culture, but I have an issue with their lack of accountability & those white liberals who enable that aspect to the detriment of black people - and this article as well many comments illustrates my point perfectly.