Auto Loans

On April 23, 2015, the New York Senate Banks Committee held a public hearing on subprime auto lending. Lisa Stifler (policy counsel at CRL) submitted written testimony on the predatory and abusive practices that have thrived due to the lack of regulation and transparency in auto financing.

Media outlets continue to report on the potential dangers of the rise in subprime auto lending. Auto lenders, particularly in the subprime auto lending market, are increasingly using risky practices to fuel lending growth. The New York Times, Fortune, NPR and other news outlets reported on recent news in the subprime auto loan market, providing opportunities to explain both the changes in the market, what risky practices are on the rise, and the potential damage those practice can cause. The overall size of the auto lending market is almost $1 trillion of outstanding loans—if this growth...

The auto finance market has grown significantly in the past few years. According to Experian Automotive, outstanding auto loan balances reached a record-breaking $870 billion in the third quarter of this 2014, an increase of 9.9% and 24.5% over the same periods in 2013 and 2012, respectively. As of the end of the third quarter of 2014, loans to consumers with below prime credit comprised 38.7% of open accounts, totaling over $336 billion. Also, according to the Federal Reserve, "The dollar value of originations to people with credit scores below 660 has roughly doubled since 2009, while...

Negotiating on Car Loans Doesn't Help African Americans and Latinos Trying to negotiate a better interest rate on your car loan should generally result in a better deal, right? Not so for buyers of color who get loans from dealers. Our survey finds that African Americans and Latinos attempt to negotiate loan pricing with car dealers more often than white consumers: 39% of Latinos and 32% of African Americans reported negotiating their interest rate, compared to only 22% of white respondents. Yet white car buyers reported receiving lower interest rates—even those who didn't try to negotiate at...

During the car buying process, you may spend hours researching prices, but make sure the vehicle financing is a good deal, too! Use this infographic to understand your auto loan options. To embed our infographic to your site, simply cut and paste the code below

Car dealerships often markup auto loans by steering buyers into a higher interest rate loan than they qualify for. Don't let this happen to you. Find out how much extra interest may be in your next car loan with this calculator.

This chapter in the State of Lending report series presents a picture of the overall financial status of U.S. consumers today. It is based on data from the Consumer Expenditure survey, the Survey of Consumer Finances, and other national data sources. These sources reveal that, since 2000, American families have faced declining real incomes,a higher cost of living, greater debt levels, and declining asset values and wealth. Rebuilding the tenuous balance sheets of American households will require access to safe and affordable credit, along with strong protections to prevent predatory lending...

Purchasing a car is a complicated endeavor, and the sales price, trade-in value, and financing are all separate and negotiable transactions. This chapter outlines how car dealers have become increasingly reliant on revenues from vehicle financing and insurance, yet those transactions are not transparent and are weakly regulated. As a result, predatory practices have created more expensive and unsustainable loans for consumers. The primary abuses highlighted this chapter include dealer interest rate markups, "yo-yo" scams, and loan packing (via add-on products like insurance), as well as...

Automobiles are one of the largest purchases most American households will make. Car ownership affects where people can live and expands their options for jobs. So the affordability and sustainability of auto financing can have a big impact on many U.S. households. Purchasing a car is a complicated endeavor, and the sales price, trade-in value, and financing can all have a big impact on the vehicle's overall cost. In this chapter, CRL describes how the lack of transparency and regulation in auto finance has allowed predatory practices to thrive. Read Our Auto Loans Chapter Previous Chapter...

Download the Full Report (PDF) >> Read our Comments to the FTC on Yo-Yo Scams (PDF) >> View a Brief Presentation on the Report (Powerpoint)>&gt Learn How Yo-Yo Scams Work >> How Dealers Rig the Game Watch this video to learn more about yo-yo scams and the latest paper. Throughout 2011, the Federal Trade Commission convened a series of roundtables to explore abusive practices in the auto lending market. One abuse that received particular attention was the "yo-yo scam". The yo-yo scam occurs when a dealer leads the car buyer to believe that the financing is final. The dealer then lures the...