Minority Car Buyers Pay Higher Interest Rates on Loans

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NEW YORK (MainStreet) — Minority car buyers have been getting ripped off. Ally Financial and Ally Bank have been ordered to pay $80 million in damages and $18 million in penalties because of discriminatory loan pricing. The Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) say that 235,000 African-American, Hispanic and Asian and Pacific Islander borrowers paid excessive interest rates on auto loans between April 2011 and December 2013.

It is the largest auto loan discrimination settlement in history.

"Discrimination is a serious issue across every consumer credit market," said CFPB director Richard Cordray. "We are returning $80 million to hard-working consumers who paid more for their cars or trucks based on their race or national origin. We look forward to working closely with the Justice Department and Ally to make sure this serious issue will be addressed appropriately in the years ahead as well."

When consumers buy cars through dealerships, financing is often arranged through third-party lenders. These lenders bid for a loan, offering a "buy rate" -- and then allow the dealer to charge an even higher rate. This "dealer markup" provides additional revenue for the auto dealer and increases the consumer's interest rate, regardless of their creditworthiness. The investigation concluded that Ally charged minority borrowers higher dealer markups for their auto loans than non-Hispanic white borrowers with similar credit backgrounds.

Ally is one of the largest indirect auto lenders in the United States.

"With this largest-ever settlement in an auto loan discrimination case, we are taking a firm stand against discrimination in a critical lending market," said Attorney General Eric Holder. "By requiring Ally to provide refunds to those who are overcharged because of their race or national origin, this agreement will ensure relief for Americans who are victimized. It will enable the Justice Department and the CFPB to work closely with Ally and others to prevent discriminatory practices in the future. And it will reinforce our determination to respond aggressively to discrimination in America's lending markets – wherever it is found."

Auto loans are the third-largest source of household debt in the U.S, after mortgages and student loans.

Under the order, Ally will pay $80 million to a settlement fund that will go to harmed African-American, Hispanic and Asian and Pacific Islander borrowers whose auto loans were purchased by Ally between April 2011 and December 2013.

A settlement administrator will contact consumers if necessary, distribute the funds, and ensure that borrowers who were affected receive compensation.

Ally will also pay an $18 million penalty to the CFPB's Civil Penalty Fund.
http://business-news.thestreet.com/...ar-buyers-pay-higher-interest-rates-loans-0/1

I just find it interesting and at the same time disappointing that these types of things continue to occur.

:smh:
 
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All just to show off...smh. I plan on buying a car (2014-2015 Avalon XLE touring) late 2014 and I'm trying to get a very low apr.. That was why I applied for a Credit card and buy very small(Gas and food) things that I can pay right back immediately with no interest gaining, so by this time next year when I am buying the car, hopefully my apr won't be no higher then 1.9%.. With my credit having a paid off car with no late payments should help..
 
thanks for the info. my thing is, if you know you dont have the funds to purchase a wip, i.e. J O  B or money in the bank. stick to a metrocard
 
Ehhh.... There are of ton of "rules" when it comes to certain things. Men pay more for auto insurance, ect... Not losing sleep over this
 
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Strong reach.




Ehh...don't
believe in financing a car anyways.

Good that they'll get their money back.
 
 
 
 
thanks for the info. my thing is, if you know you dont have the funds to purchase a wip, i.e. J O  B or money in the bank. stick to a metrocard

What are you talking about? Who is this "you"?
a human being
stop trying to make this into something it'snot
You are getting pretty defensive and are reaching. I just asked the guy what and who is he talking about.
eyes.gif


you being whoever is reading, who else can it be
 
Good article OP...

Nothing wrong with financing/leasing a new/used car, as long as it's within your budget.

it's still crazy how much racism is out there, especially towards african americans :smh:
 
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This is just a very small example with data to back up their statement. Beings who are of a darker pigment have this continuously occurring with jobs, school, legal system and life in general. Until we are a united race of all descents and we see each other of that as a shade of grey.
 
You are getting pretty defensive and are reaching. I just asked the guy what and who is he talking about.
Just curious, who and what did you think he was talking about?

Honestly, I still do not have any idea of what he was talking about. He stated "you don't have...JOB or money in the bank". I don't know whether he's talking about the people in the article I posted, people in general, or NTers reading this thread like he said. Then I thought he may have been implying that no one ever should take out a loan for a car, since he implied that they don't have money in the bank.
 
*Flame Suit On*
It's our own fault. Buying cars to front like we've made it. Smh at buying cars that are way beyond our price range. YES I just made it about race and YES this is coming from a minority.

However on the other side


That's messed up :frown: minorities just trying to make it up the ladder and they keeping us down
 
Honestly, I still do not have any idea of what he was talking about. He stated "you don't have...JOB or money in the bank". I don't know whether he's talking about the people in the article I posted, people in general, or NTers reading this thread like he said. Then I thought he may have been implying that no one ever should take out a loan for a car, since he implied that they don't have money in the bank.

I didn't understand what he was trying to say either.
 
*Flame Suit On*
It's our own fault. Buying cars to front like we've made it. Smh at buying cars that are way beyond our price range. YES I just made it about race and YES this is coming from a minority.

However on the other side


That's messed up :frown: minorities just trying to make it up the ladder and they keeping us down

Yea cuz white people don't buy cars beyond their means at all.
 
I got a good apr through ally a few years ago. But like almost every dealer, you have haggle to get that good apr. First they came at me with 5%, so I walked out and left. 10 mins later they call with a 2.5% offer lol. I dont believe all those higher interestt rates were race driven. Alot of minorities just dont know how to get the best interest rate and shop around.
 
Being a finance manager for a pretty big auto company.. I could really go hard on this subject and tell you guys things that'll really shock you. That said the whole I'll go through my credit union b.s. doesnt really scare us off... most companies I.e. Honda Ford Dodge offer incentives to finance with them I.e. more rebate etc.
 
I got a good apr through ally a few years ago. But like almost every dealer, you have haggle to get that good apr. First they came at me with 5%, so I walked out and left. 10 mins later they call with a 2.5% offer lol. I dont believe all those higher interestt rates were race driven. Alot of minorities just dont know how to get the best interest rate and shop around.

Well by law they are allowed to hold 2 sometimes 2.5 points of rate. If your FI guy knew what he was doing youd have a fully protected car loan at 2 percent interest.
 
*Flame Suit On*
It's our own fault. Buying cars to front like we've made it. Smh at buying cars that are way beyond our price range. YES I just made it about race and YES this is coming from a minority.

However on the other side


That's messed up :frown: minorities just trying to make it up the ladder and they keeping us down

Where did you come up with this? It's a minorities fault they are hit with extra charges because of the origin or colour of their skin?
 
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