'Blacks pay more for Honda car loans'
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  1. #1
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    Default \'Blacks pay more for Honda car loans\'

    'Blacks pay more for Honda car loans'

    Blacks in Wisconsin typically have paid twice as much as whites in added-on finance charges when buying a car through Honda's in-house lender, a new study says.

    State Ranks Worst

    The racial disparity gap in Wisconsin was the largest among the 15 states analyzed between 1999 and 2003 in the study.

    By The Numbers

    $568 - How much more black customers in Wisconsin paid on average than comparable white customers in financing charges through Honda's lending unit, according to the study.

    $325 - How much more blacks paid on average in the 15 states studied.

    The study asserts that on average, African-American car buyers paid $568 more in finance charges than comparable whites when dealers using American Honda Finance Corp. subjectively raised the interest rate on auto loans to some customers.

    That racial disparity gap in Wisconsin was the largest among 15 states analyzed in the study.

    "I am not surprised," said Dester Martin, chairman of the executive committee of the African-American Chamber of Commerce of Greater Milwaukee.

    Martin said the study shows that blacks "are paying a premium" to be able to drive new cars.

    Gary D. Williams, president of the Wisconsin Automobile and Truck Dealers Association, said the findings are both embarrassing and puzzling.

    "If the study here is dealing with people of similar creditworthiness - their credit scores are similar - then that's something that's troublesome," Williams said.

    The study was conducted by a Vanderbilt University professor and is being used in a discrimination lawsuit against Honda in Tennessee. The findings were adjusted for creditworthiness of the borrowers, geographic area, terms of loans and the type of vehicle, according to the Consumer Federation of America, which publicized the study Tuesday.

    The study surveyed about 133,000 American Honda Finance Corp. customers in 15 states between 1999 and 2003 for which race-coded data was available. Overall, the study found, blacks paid an average of $325 more than whites for a loan through American Honda Finance Corp.

    The study analyzed 138 loans to blacks and 1,618 loans to whites in Wisconsin.
    Honda issues statement

    American Honda Motor Co. Inc. issued a statement Tuesday that says, "Honda does not and will not tolerate any conduct by its dealers that discriminate against customers or credit applicants on any basis.

    "American Honda and American Honda Finance Corporation require its dealers to follow fair lending practices as stated clearly in their dealer agreements and as required under applicable law," says the statement, which was e-mailed by spokesman Jeffrey Smith.

    The findings for Honda were similar to a 2001 study by the same Vanderbilt professor, Mark A. Cohen, in a lawsuit against Nissan Motor Co.'s lending arm. That study, which involved 33 states, also showed the biggest difference between black and white car buyers in discretionary finance charges was in Wisconsin.

    Stephen Brobeck, executive director of the Consumer Federation of American, said it was difficult to say precisely why there is such a racial disparity.

    "We can only speculate. I don't think there's any conscious racism. I think that there's an assessment of the willingness of the customer to accept a markup," he said.

    In that sense, a consumer who has not shopped for interest rates on a car loan with a bank or credit union before going to a dealer is vulnerable to paying a higher rate than necessary, he said.

    Still, Brobeck said, his organization considers any markup over the interest rate at which a car buyer qualifies for a loan to be unjustified.

    "Our hope is that the findings of this latest report will encourage Honda to change its abusive lending practices," Brobeck said.

    Larry Marx, co-director of Wisconsin Citizen Action, an organization focused on social, economic and environmental issues, said the study was another example of the racial gap between blacks and whites in the state. It comes on the heels, for example, of national studies that show African-Americans are much more likely than whites to be turned down for mortgage loans in metropolitan Milwaukee, he said.

    "It's just outrageous," Marx said.

    Martin said blacks "put a lot of dollars" into the economy. "The economy grows a lot of times on the African-Americans' back, just by being consumers," Martin said.

    When a dealer arranges in-house financing for a car, he or she submits the customer's credit application to the lender. Lenders affiliated with automakers approve an interest rate for the car loan based on the person's income and credit history. But some lenders also allow dealers to add percentage points to that rate without informing the customer. The amount of that finance charge markup then can be shared by the dealer and lender.

    Car dealers justify the markup as the customer's cost of being able to obtain a loan on the spot instead of going back to a bank or credit union for financing. Some consumer advocates contend the markup is a problem because it results in a customer's cost of credit being determined partly by something other than his or her creditworthiness.

    In February, General Motors Acceptance Corp., the nation's second-largest auto lender, agreed to settle a 6-year-old class-action lawsuit that accused the company of allowing dealers to improperly raise interest rates for black and Hispanic car buyers. GMAC agreed to cap dealer markups at 2.5% as part of a negotiated settlement.

    GMAC also has agreed to offer 1.25 million loans with no dealer markups to qualified blacks and Hispanics over the next five years.

    The program mirrors one that Nissan Motor Acceptance Corp. launched under a settlement reached last year in a similar lawsuit.

    Knight Ridder news service contributed to this report.

    http://www.jsonline.com/news/state/jul04/246908.asp

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  3. #2
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    Default Re: \'Blacks pay more for Honda car loans\'

    'Blacks pay more for Honda car loans'

    $568 - How much more black customers in Wisconsin paid on average than comparable white customers in financing charges through Honda's lending unit, according to the study.

    $325 - How much more blacks paid on average in the 15 states studied.

    The study asserts that on average, African-American car buyers paid $568 more in finance charges than comparable whites when dealers using American Honda Finance Corp. subjectively raised the interest rate on auto loans to some customers.

    That racial disparity gap in Wisconsin was the largest among 15 states analyzed in the study.
    <font color="red"> "If the study here is dealing with people of similar creditworthiness - their credit scores are similar - then that's something that's troublesome," Williams said.</font>


    The study was conducted by a Vanderbilt University professor and is being used in a discrimination lawsuit against Honda in Tennessee. The findings were adjusted for creditworthiness of the borrowers, geographic area, terms of loans and the type of vehicle, according to the Consumer Federation of America, which publicized the study Tuesday.

    The study surveyed about 133,000 American Honda Finance Corp. customers in 15 states between 1999 and 2003 for which race-coded data was available. Overall, the study found, blacks paid an average of $325 more than whites for a loan through American Honda Finance Corp.

    <font color="red"> The study analyzed 138 loans to blacks and 1,618 loans to whites in Wisconsin.
    Honda issues statement</font>


    American Honda Motor Co. Inc. issued a statement Tuesday that says, "Honda does not and will not tolerate any conduct by its dealers that discriminate against customers or credit applicants on any basis.

    "American Honda and American Honda Finance Corporation require its dealers to follow fair lending practices as stated clearly in their dealer agreements and as required under applicable law," says the statement, which was e-mailed by spokesman Jeffrey Smith.


    In that sense, a consumer who has not shopped for interest rates on a car loan with a bank or credit union before going to a dealer is vulnerable to paying a higher rate than necessary, he said.
    Larry Marx, co-director of Wisconsin

    When a dealer arranges in-house financing for a car, he or she submits the customer's credit application to the lender. Lenders affiliated with automakers approve an interest rate for the car loan based on the person's income and credit history. But some lenders also allow dealers to add percentage points to that rate without informing the customer. The amount of that finance charge markup then can be shared by the dealer and lender.


    http://www.jsonline.com/news/state/jul04/246908.asp

    Look at the amount of loans that they compared. They never said anything (besides what I put in red) about credit scores either.

  4. #3
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    Default Re: \'Blacks pay more for Honda car loans\'

    uhhhh....nevermind

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  6. #4
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    Default Re: \'Blacks pay more for Honda car loans\'

    uhhhh....nevermind

  7. #5
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    Default Re: \'Blacks pay more for Honda car loans\'

    yeah errr ummm i'd like to see some info about the credit scores of all the black people and all the white people before i make a decision.

  8. #6
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    Default Re: \'Blacks pay more for Honda car loans\'


    Look at the amount of loans that they compared. They never said anything (besides what I put in red) about credit scores either.
    There are less blacks then whites in the area studied, it's called a proportionate ratio. And any study worth a darn is going to take credit scores into account, if it didn't Honda would have just said so, i don't see them letting this study out with out objecting.

    No need for rolling eyes.

  9. #7
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    Default Re: \'Blacks pay more for Honda car loans\'


    Look at the amount of loans that they compared. They never said anything (besides what I put in red) about credit scores either.
    There are less blacks then whites in the area studied, it's called a proportionate ratio. And any study worth a darn is going to take credit scores into account, if it didn't Honda would have just said so, i don't see them letting this study out with out objecting.

    No need for rolling eyes.
    Is this a study that's worth a darn though? I don't believe everything (or most things) that I read either. (what's the saying,believe nothing of what you hear and half of what you see?) I want to see where they take credit scores into account.

    I live in Wisconsin, so you don't have to tell me about the disporportionate (sp?) in races that live here. I guess I don't understand why they wouldn't compare 1000 white loans to 1000 black loans though.

  10. #8
    Mammoni
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    Default Re: \'Blacks pay more for Honda car loans\'

    Is this a study that's worth a darn though? I don't believe everything (or most things) that I read either.
    [deepvoice]Depends on if it was written by the WHITE man![/deepvoice] Yeah, I know... I'm going to hell.

    Even if blown out of proportion, you could argue that whiteys (especially them Wisconsin crackers) are just better at shopping around for prices... kinda like how dem asians are all good at algebra and stuff.

  11. #9
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    Default Re: \'Blacks pay more for Honda car loans\'

    WHOO HOO!
    At least us Wisconsin crackers are good for something


 

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