Categories:  'Economic Inequality'  

Dealer-arranged Financing Can Lead to Unfair and Deceptive Lending

" Most auto dealer profits are made not by selling cars but by making auto loans that often contain hidden finance charges ad other essentially [...]

Most auto dealer profits are made not by selling cars but by making auto loans that often contain hidden finance charges ad other essentially useless add-ons like credit insurance. Take dealer interest-rate markups. When a consumer opts for “dealer financing,” the dealer is basically acting as a middleman between car buyer and the lender. the lender – say, a finance company owned by the carmaker – tells the dealer the interest rate it requires to do the loan, but gives the dealer discretion to quote a higher rate to the borrower on the understanding that any extra revenue will go to the dealer or be shared by the dealer and the lender. This discretion has led to minority borrowers paying higher interest rates than white borrowers with similar credit histories. a report by the Center for Responsible Lending estimated that dealer markups on loans made in 2009 would cost consumer an additional $25.8 billion over the lives of their loans.

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Publication Date: 21/07/2017
Source: Jalopnik
Author: Ryan Felton
Publication Date: 21/07/2017
Source: Jalopnik
Author: Ryan Felton
Publication Date: 13/06/2015
Source: The New York Times
Author: The Editorial Board