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Press Releases

May 15, 2014
On May 22, 2014, the Center for Responsible Lending, in partnership with other civil and consumer rights advocates, will host a briefing on the auto lending abuses that affect communities of color, low–wealth and the military. The briefing will take place in the House Transportation Committee room, at 2 pm. Few household transactions are as significant, or as large, as the purchase of a family car. Recently, federal regulators have shone a spotlight on potential discrimination in car lending. The discussion will focus especially on the practice of car dealer interest rate markups...
April 28, 2014
Chris Kukla, vice president of the Center for Responsible Lending, said: We are happy to see that BMO Harris Bank will no longer compensate car dealers through hidden interest rate increases. BMO Harris is ahead of its peers in ending "dealer interest rate markups," a common, virtually invisible practice that adds billions of dollars to the cost of car loans. The bank's action comes in the wake of recent enforcement actions and guidance from the Consumer Financial Protection Bureau (CFPB). An enforcement action against Ally Bank in December 2013 found that borrowers of color paid more...
January 23, 2014
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. According to a new report issued today by the Center for Responsible Lending (CRL), 39% 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...
December 20, 2013
With today's settlement with Ally Financial, Inc. and Ally Bank (Ally), the Consumer Financial Protection Bureau and Department of Justice took a major step to combat the longstanding problem of discrimination in car loans originated by automobile dealers. The practice that leads to this discrimination is auto loan "markups," when car dealers charge their customers higher rates than they qualify for. The dealer then retains some or all of the difference from the loan purchaser as compensation. During the past decade, these markups have been the subject of a number of lawsuits that found...
March 22, 2013
Dealers should not be allowed to impose higher interest rates than necessary on consumers Yesterday the Consumer Financial Protection Bureau announced it would hold banks and other lenders liable for any auto loans in their portfolio that are discriminatory. We were encouraged by today's announcement and hope it is the first step toward eliminating unfair interest-rate markups by auto dealers. Dealers should not be allowed to sell a consumer a higher interest rate than necessary. A flat-fee system would ensure that the dealers have an incentive to provide the lowest interest rate...
December 12, 2012
In the first report of its kind, the Center for Responsible Lending examines consumer lending markets across-the-board and finds that—despite major gains in regulatory reforms—predatory lending continues to undermine American households trying to rebuild their finances after the recession. View or download the report: http://rspnsb.li/state-of-lending. The State of Lending in America and its Impact on U.S. Households (State of Lending) paints a picture of working families struggling to manage debt while coping with stagnant incomes and a substantial decrease in wealth. The...
April 4, 2012
Car dealers often target consumers with poor or no credit for yo-yo scams, a new CRL report demonstrates. "Yo-yo scams occur when a dealer leads a car buyer to believe financing is final," says CRL senior researcher Delvin Davis, author of the report, Deal or No Deal: How Yo-Yo Scams Rig the Game against Car Buyers. "The dealer lures the consumer back to the dealership, claims the financing fell through, and then pressures the consumer to agree to a new loan at a higher interest rate." For the full report go to: http://rspnsb.li/yo-yo-scams. The report also found that dealers involved in...
December 24, 2011
North Carolina has been – and I hope will continue to be – a leader in finding effective solutions to predatory lending. Over the past decade, our lawmakers struck an effective balance between strong financial markets and fair consumer protections, enacting laws that are now models for other states and Congress. In the area of housing, North Carolina has often been in the forefront. Our state was the first to establish protection against predatory mortgage lending. It regulated mortgage brokers and lenders, and passed laws to prevent some of the worst subprime loan abuses. And...
July 27, 2011
Over 38 million vehicles were financed through an auto dealer last year, with many loaded with abusive lending practices that cost Americans billions of dollars. Auto dealers often steer unsuspecting buyers into overpriced loans, especially when kickbacks from the bank to the dealer are involved. Until now such practices have continued largely unknown to consumers and unregulated, but new consumer protection laws have changed that by giving the FTC new oversight authority. In its new role, the FTC is holding fact-gathering sessions around the country. It will hold its second one, open to...
April 19, 2011
Consumers who financed a car through a dealership in 2009 will pay more than $25.8 billion in extra interest over the lives of their loans because of dealer interest rate markups, according to new research by the Center for Responsible Lending (CRL). This is an increase of 24 percent from 2007. CRL also found that undisclosed markups increase the odds that a subprime borrower will default by 12 percent and odds that he or she will end up having their car repossessed by 33 percent. The report, "Under the Hood: Auto Loan Interest Rate Hikes Inflate Consumer Costs and Loan Losses," examines...

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