Discriminatory Auto Lending Policies May Impact POCs

Red car sitting on descending coins

A recent study conducted by the National Fair Housing Alliance (NFHA) has shown that the auto lending industry maintains discriminatory practices that disadvantage people of color when applying for an auto loan. The study shows that more qualified, non-White car buyers are 63 percent more likely to receive higher interest rates. In addition, non-White car buyers receive higher price markups when compared to less-qualified, White customers. Even though the evidence of systemic racism is present, the Federal Trade Commission (FTC) is only just starting crack down.

Discriminatory Auto Lending Policies

The United States trails behind many of the world’s most developed countries in terms of mass transit. Although almost all Americans need a vehicle, people of color (POCs) are significantly less likely to own a vehicle in the United States. In another study conducted by University of California Berkley, researchers found large disparities in car ownership between Whites and Blacks. They also found that low car ownership rates and racial housing segregation result in many households without access to cars. Even when a person of color possesses the right assets to purchase a car, discriminatory policies could prevent the purchase altogether.

Shining a Light on Discriminatory Auto Lending Policies

The NFHA completed a small-scale study in 2018 throughout the Commonwealth of Virginia. Eight pairs of people – one White, one non-White — went to various car dealerships in Virginia. The pairs of testers both displayed interest in purchasing a vehicle and were extremely similar. The only small difference was that the non-White buyer was more financially qualified to purchase the vehicle. The study found that 63 percent of the time the non-White persons received harsher treatment. On average, non-White buyers saw an extra $2,351 added over the life of the auto loan. This study displays the definitive results that racial bias and discrimination are still present today.

MWA is a Voice for Our Community

McCune Wright Arevalo, LLP, has zero tolerance for any type of racial bias or discrimination. Our Racial and Economic Justice attorneys refuse to stand by while people are being taken advantage of. With over thirty years of experience and $1 billion recovered for our clients, our attorneys will fight for you to ensure that any form of discrimination is dealt with, and justice is served.

If you or a loved one has experience racial bias or discrimination when purchasing a vehicle, contact McCune Wright Arevalo today by completing the form or calling (909) 345-8110 today!

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