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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsSMH, Car dealers have a nasty and pernicious habit of charging black and Latino customers higher
http://consumerist.com/2014/01/23/car-dealers-charge-white-customers-less-than-everyone-else-study-finds/Car dealers have a nasty and pernicious habit of charging black and Latino customers higher rates than white ones, a study from the Center for Responsible Lending has found. The full report (PDF) delves into the research, methodology, and findings.
Its not a matter of one group of buyers being less savvy shoppers than another group: white buyers were actually the least likely to try to negotiate the terms of a loan, with only 22% of white buyers giving it a go. In contrast, 32% of black buyers and 39% of Latino buyers negotiated their interest rates.
NOT SURE I WILL LIVE TO SEE THE DAY WHEN WE ARE ALL TREATED EQUAL.........
yeoman6987
(14,449 posts)The cars are the same price, but the interest rates are different. If the credit scores are the same, this is a big problem.
Trekologer
(997 posts)The bank sets the interest rate at, say 7.0% but the dealer can add additional interest percentage points which is returned as commission. In this case, it is doubtful that banks are doing it.
When you buy a car, have the financing lined up already or at least know what interest rate you should be getting.
kelliekat44
(7,759 posts)My uncle who is a pretty savvy businessman successfully purchased a waterfront home in an fairly exclusive (meaning all white) seashore resort. He secured his financing FIRST from a banker friend and then proceeded with the realtor not knowing that financing had already been secured. Of course, the realtor took the bids from my uncle and four other potential buyers. The property asking price was $379,000 (this was in 1997). The others were quibbling over price and seller contributions to settlement etc. Long story short...the realtor went through all the motions that they do and basically tried to steer my uncle to a lender thinking that he would not be able to secure financing or that the financing costs would discourage my uncle from accepting the deal. Turned out that my uncle closed the deal, brought the property, and moved his family in over the next three weeks. Four weeks to the day, the beach front neighbor visited my uncle and offered to buy his new property for $850,000.00. The family voted and refused to sell because it was a spot they wanted to keep in the family for his children and his grandchildren. (NC outer banks). The terms of the loan from the bank the realtor tried to use was astoundingly bad for the buyer. He's an uncle who has little relationship with the rest of the family as he is pretty wealthy and seldom recognizes us underlings but the story is legend within our VERY mixed family but all considered African American by either blood or association.
Mr Dixon
(1,185 posts)Good for him
Bluenorthwest
(45,319 posts)nt
Nye Bevan
(25,406 posts)but a few months ago someone alerted on a post that contained "smh", claiming that it stood for "suck my hole", and was successful in getting it hidden!
Shaking my head
shenmue
(38,506 posts)Can't believe people still think they can get away with this.
redqueen
(115,103 posts)Nye Bevan
(25,406 posts)The salesman I was emailing would have had no idea of my ethnicity. That is one way to eliminate race from the equation.
Agreed
bettyellen
(47,209 posts)dembotoz
(16,799 posts)she who must be obeyed recently acquired a newer used car
and took it to a dealership for service (by recently i mean 2 weeks ago)
the whoppers she was told about what the car should have done would make your head spin
FarCenter
(19,429 posts)Automobile dealers who three years ago won an exemption from direct oversight by the U.S. Consumer Financial Protection Bureau have found that it still has a lot of clout over how they finance car sales.
Under pressure from the agency, large banks that routinely buy auto loans have been reviewing records to ensure the dealers they work with arent discriminating against customers on the basis of race or gender. When firms including Bank of America Corp. find evidence of possible unfair treatment, they are sending warning letters to the dealers.
The situation is a turnabout from the industrys lobbying victory in 2010, when it won a carve-out in the Dodd-Frank financial regulatory law from the consumer bureaus authority.
Dealers are learning a painful lesson, said Richard Hunt, head of the Consumer Bankers Association, which represents large institutions. If you provide a financial product to consumers, you will be under the oversight of the CFPB -- one way or another.
...
The vehicle loan market, measured by outstanding volume of lending, was $751 billion at the end of June, according to Experian Plc. (EXPN) Of that, 58 percent came from banks and credit unions, with another 28 percent from finance companies controlled by car manufacturers. The major banks involved in auto finance, which besides Bank of America include Wells Fargo & Co. (WFC), JPMorgan Chase & Co. (JPM) and Ally Financial Inc. (ALLY), are examined directly by the consumer bureau.
...
The guidance takes aim at a practice the agency refers to as dealer mark-up and auto dealers call dealer-assisted financing or dealer reserve. Under the system, banks function as indirect lenders, allowing dealers to add points to the interest rate and pocket the difference. The consumer bureau said that one way for lenders to comply with guidance would be to pay flat fees to dealers instead of varying interest rates.
http://www.bloomberg.com/news/2013-10-18/banks-pushed-by-regulators-send-nastygrams-to-car-dealers.html
The article is long, and it discusses the structure of the auto lending industry and a number of unscrupulous dealer practices.
Demo_Chris
(6,234 posts)Is almost certainly a side effect of credit ratings rather than race. Statistically minorities have less money, and it stands to reason this negatively impacts their credit ratings. The worse that rating is, the more likely they are to have to accept whatever they can get.
But no, car dealers aren't doing this. Car dealers are trying to charge EVERYONE more. As for the "savvy shoppers" and negotiation thing, as someone who used to sell cars and was quite good at it, here's my opinion on how to get a good price and enjoy your car.
No matter how good you think you are at hard bargaining, (and you don't really think that, do you?) you aren't out-negotiating anyone. At best you are annoying them, and if you do it enough they are going to demonstrate just how negotiating works by completely fucking you -- and you won't even know it, because despite how you act you aren't god's gift to negotiation.
Pick a price that you think is fair, one that allows the dealer and salesman to make a few bucks, and go in at the END of the month. If you have a trade, if you care about it add it AFTER everything else is agreed to. Don't make fighting over a few hundred bucks ruin what could be a fun experience. Instead, focus on enjoying yourself and getting the RIGHT car.
Did you read the entire article or just skip to your rant?
"Earlier research cited in the report found that the race-based discrepancies persist when controlling responses for customers credit ratingand that they disappear when buyers are shopping on the internet, rather than in-person."
KamaAina
(78,249 posts)it often goes along with "the female tax".
Mr Dixon
(1,185 posts)I call it the Sambo special