Latest Study: Negotiation Doesn’t Help African Americans and Latinos on Dealer-Financed Car Loans

According to a recent study released by the Center for Responsible Lending, African Americans and Latinos pay higher interest rates on dealer-financed car loans than white buyers, even though people of color report more attempts to negotiate a better deal. Thirty-nine percent of Latinos and 32% of African Americans reported attempts to negotiate their interest rate, compared to only 22% of white respondents - yet buyers of color received higher interest rates.

The report, "Non-Negotiable: Negotiation Doesn't Help African Americans and Latinos on Dealer-Financed Car Loans," is based on information collected from 946 consumers in a detailed telephone survey conducted in October 2012. The results are consistent with longstanding findings of racial and ethnic discrimination in the auto lending industry.

While several studies have found pricing disparities on car loans even after controlling for credit risk, this is the first research on the impact of shopping habits, information received from car dealers, and the disparities related to add-on products, such as high-priced insurance and warranties. The survey showed that the amount of comparison shopping for car loans was similar among all racial and ethnic groups, with African Americans and Latinos engaging in comparison shopping slightly less. Car buyers of color were much more likely to report receiving misleading information about their car loan, and they were nearly twice as white consumers to be sold multiple add-on products.


The survey found that dealers sold African Americans and Latinos multiple add-ons 30% and 27% of the time, respectively,versus only 16% of the time for whites.

To see the entire report, click on this link.