May 26, 2018

Report Claims Dealers Discriminate in Auto Finance

By Ted Craig January 17, 2018

A recent study claiming racial discrimination in auto sales is getting plenty of national attention.

The report, "Discrimination When Buying a Car: How The Color of Your Skin Can Affect Your Car-Shopping Experience,” was the basis for pieces on the national news broadcasts from CBS and NBC, among others.

The report comes from the National Fair Housing Alliance (NFHA). According to its mission statement, the NFHA is “dedicated solely to ending discrimination in housing.”

The NFHA said it recently conducted an investigation of eight franchise dealerships in eastern Virginia. The investigation used standard paired testing methodology.

Within each paired test, one white tester and one non-white tester visited a car dealership to obtain purchase and financing information for the same car. In each case, the NFHA says the non-white tester was more creditworthy than the white tester.

The investigation found that testers of all races had difficulty obtaining concrete and transparent information regarding car pricing, interest rates, and finance options for which they qualified. However, the NFHA says non-white testers often received more costly pricing options than their white counterparts for the exact same vehicle.

The FHA claims dealers helped white testers by offering rebates or helping to bring down interest rates more often than they did for non-white testers. Non-white testers were presented with higher-cost financing options 62.5 percent of the time, even though they were better qualified than their white counterparts.

White testers were offered more financing options 75 percent of the time.

On average, non-white testers would have paid an average of $2,662.56 more over the life of the loan than less-qualified white testers the study claims.

 

Last modified on Monday, 26 February 2018 16:29