If you suspected some car dealers and lenders set higher interest rates for African Americans and Hispanics, looks like you were right. The Consumer Financial Protection Bureau (CFPB) estimates consumers lose tens of millions every year because of car dealer-lender discrimination.
Warning to lenders
The CFPB issued a bulletin, with guidelines, warning lenders they are responsible for unlawful, discriminatory pricing when they make loans through dealerships. CFPB Director Richard Cordray said, “Consumers should not have to pay more for a car loan simply based on their race,”
How dealers and lenders discriminate
When you buy a car and arrange financing through the dealer, the lender sets an interest rate. But the dealer can mark up the loan with a higher rate and keep the difference. The CFPB says even if they are credit worthy, “Research indicates that markup practices may lead to African Americans and Hispanics being charged higher markups than other, similarly situated, white consumers.”