FOR IMMEDIATE RELEASE:
May 7, 2007
Jack Gillis, 202-737-0766
AFRICAN-AMERICANS PAY HIGHER AUTO LOAN RATES BUT CAN
TAKE STEPS TO REDUCE THIS EXPENSE
Washington, DC -- A Consumer Federation of America (CFA) analysis of the most
recent Federal Reserve Board Survey of Consumer Finances data reveals that African-Americans
pay much higher auto loan rates than do other Americans and that this "rate gap" has increased.
• On 2004 loans for new car purchases, blacks paid a typical (median) rate of 7.0%
compared to a typical rate of 5.0% for all borrowers. On used car loans, African-
Americans paid a typical rate of 9.5% compared to a typical rate of 7.5% for all
borrowers. This rate gap of two percentage points is much higher than the rate gaps of
1.3 and 1.2 percentage points for 2001 new and used car loans respectively reported by
• A far higher percentage of African-Americans, than other Americans, were likely to pay
auto loan rates of at least 15%. For new car loans, in 2004 6% of African-American
borrowers paid this much, compared to only 2% of all Americans. For used car loans,
27% of black borrowers paid this much, compared to only 13% of all borrowers.
• The percentages of black households and all other households with at least one auto loan
differed little -- 32% of all African-American households and 35% of all households.
"It's hard to believe that any differences in credit-worthiness explain all of these rate
gaps," said Stephen Brobeck, CFA's Executive Director. However, he added: "African-
Americans can take steps to lower their auto loan costs. Most importantly, they should call their
bank or credit union for an auto loan rate quote before talking about financing with a car dealer
or finance company."
Calling one's bank or credit union for a rate quote will minimize the chances of a car
dealer marking up the loan rate above the risk-related "buy rate." Detailed research by
academics, earlier this decade, of data on millions