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 getloans 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 all.

Previous research has shown that interest rate disparities persist even when controlling for credit differences. So what makes the difference?

This report identifies three factors that can add unnecessary costs to car loans made by dealers:

  • Hidden dealer increases in the interest rate ("markups")
  • Misleading sales information
  • Add-on products, such as insurance and warranties.

In addition to getting higher interest rates, African Americans and Latinos also reported more instances of receiving misleading information, and they were nearly twice as likely as white consumers to be sold multiple add-on products

We need fair car lending rules that remove incentives to overcharge on car loans. Find out more about business practices that boost the cost of car loans and the consequences for targeted families.

Discourage Car Loan Reforms … Really?

CRL's "Non-Negotiable" report is consistent with years of negative research findings and lawsuits on highly questionable business practices by auto dealers.

In spite of this record, some members of the House and Senate are trying to discourage the CFPB from pursuing reforms to remove incentives for overcharging on car loans.

In 2013, the CFPB received three "back off" letters from some members of Congress:

Letter from House Democrats

Letter from House Republicans

Letter from Senate


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