Released: May 10, 2007

Minorities pay more for auto loans

Source: Michelle Singletary, Washington Post (Free Registration)

It’s probably fair to say that most car buyers know they don’t have to pay the manufacturer’s suggested retail price on a new car. We know the deal—the vehicle price is negotiable at dealerships, where haggling is still the industry norm.

But for many borrowers, that same knowledge needs to carry over to the interest rate they pay to finance a vehicle. This is particularly true for African Americans.

An analysis of the most recent Federal Reserve Board’s Survey of Consumer Finances data, completed on behalf of the Consumer Federation of America (CFA), found that in 2004, African American car buyers paid much higher loan rates on new and used autos than white Americans.

On 2004 loans for new-car purchases, blacks paid a median interest rate of 7 percent - compared with 5 percent for white borrowers and 5.5 percent for Hispanic borrowers.

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