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Op-Ed

Car Dealers Charge Exorbitant Interest Rates

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Charlene Crowell

By Charlene Crowell
NNPA Columnist

 

Car lending is on the rise, and rising with it is a hidden, unfair, abusive and discriminatory practice: car dealer interest rate markups. Surveys show that at least two-thirds of Americans have no idea it happens.

A decade ago, the largest auto finance companies settled landmark cases alleging discrimination in auto lending. Recent enforcement actions suggest that discrimination and unfairness still exist in the auto lending market.

Since 80 percent of the cars financed in the U.S. are financed through the dealer, this hidden practice is a huge threat to consumers.

Just this week, Honda Finance Corporation (HFC) agreed to pay $24 million in restitution to borrowers of color as a part of a settlement with the Consumer Financial Protection Bureau (CFPB) and Department of Justice (DOJ), after investigators discovered HFC’s policy to allow dealers to mark up the interest rate resulted in borrowers of color paying more in interest than White borrowers.

Unfortunately, Honda’s discriminatory auto practices are not an isolated incident.

An earlier settlement that CFPB and DOJ’ reached with Ally Bank, in which Ally agreed to pay $98 million in civil penalties and restitution, to settle claims of discrimination. Black, Latino and Asian American car buyers who financed with Ally paid more in interest on their loans than similarly situated White borrowers because of car dealer interest rate markups.

In September, CFPB revealed that several lenders agreed to pay more than $50 million in fines and restitution because supervisory examinations revealed issues of discrimination. And, a recent settlement between the DOJ and Evergreen Bank found similar disparities in Evergreen’s motorcycle lending portfolio, also attributable to dealer interest rate markups.

Consumer advocates welcomed the enforcement actions but cautioned that more work still needs to be done.

“We continue to believe that the only effective way to completely eliminate the discriminatory impact and the unfairness of hidden dealer interest rate markups is to end the practice altogether,” said Chris Kukla, CRL Senior Vice President. “This is a step in the right direction and we urge the CFPB and DOJ to continue pursuing the remaining cases.”

Kukla continued, “However dealer interest rate markups remain an unfair and hidden practice with continued potential for discrimination. CFPB and DOJ must vigilantly monitor the data for discriminatory or unfair impact and act swiftly if and when that impact occurs.”

For the moment, however, Richard Cordray, CFPB’s director will mark the progress made as the journey towards fair lending continues.

“Honda’s proactive decision to move to a new pricing and compensation system demonstrates industry leadership and represents a significant step towards protecting consumers from discrimination,” observed Cordray.

Dealer interest rate mark-up is the practice of adding extra interest to a consumer’s loan–dealers pocket this difference as compensation.

How does it work in practice?

A borrower qualifies for a loan at 5 percent, but the dealer raises it by as much as 2.5 percent more. The dealer tells the consumer, “Great news! We got you a great rate of 7.5 percent!”  The dealer then collects a large bonus payment, up to a thousand dollars or more, when it sells the loan to a lender. The borrower gets stuck with higher car payments for the life of the loan.
Research, court cases and enforcement actions have shown that consumers of color have their loans marked-up more often, and by a greater amount, than White borrowers with similar credit profiles. Data from a series of court cases settled a decade ago found that African American and Latino borrowers were twice as likely to be hit with a dealer interest rate markup, and that markup was on average twice as large as for a similarly-situated white borrower.  Those lenders agreed to cap the amount of markup dealers could add to the interest rate for 10 years, and those agreements have all expired.

Additional CRL research showed that for borrowers of color, following the auto dealers’ own advice on avoiding paying too much in markup does work. Car dealers insist that the interest rate is also negotiable, and that if consumers negotiate the rate like they do the price of the car the threat of overcharge disappears.

CRL data refutes that. According to a CRL-sponsored survey, borrowers of color reported attempting to negotiate the interest rate as much, if not more often, than white borrowers, and yet paid higher interest rates than similarly situated white borrowers. In fact, borrowers of color who negotiated the interest rate paid more than White borrower who did not negotiate.

Media accounts suggest that the CFPB and DOJ are working on several more cases alleging discrimination, and other bank regulators are also referring cases to the DOJ. A host of other enforcement agencies have also launched investigations into auto lending, including whether dealer markups have a discriminatory impact. A similar practice was banned in the mortgage market; it is long past time to end the same practice in the auto lending market.

Even though every forward stride deserves its own acknowledgement, the car lending market still lacks transparency and fairness for many consumers. Dealer interest rate markups are unfair and discriminatory, and we should not tolerate hidden fees that result in unfairness and discrimination in any financial marketplace.

Here’s hoping that car sales will soon be more broadly and fairly transacted for everyone.

 

Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.

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#NNPA BlackPress

COMMENTARY: The National Protest Must Be Accompanied with Our Votes

Just as Trump is gathering election data like having the FBI take all the election data in Georgia from the 2020 election, so must we organize in preparation for the coming primary season to have the right people on ballots in each Republican district, so that we can regain control of the House of Representatives and by doing so, restore the separation of powers and balance that our democracy is being deprived of.

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Dr. John E. Warren Publisher, San Diego Voice & Viewpoint
Dr. John E. Warren, Publisher San Diego Voice & Viewpoint Newspaper. File photo..

By  Dr. John E. Warren, Publisher San Diego Voice & Viewpoint Newspaper

As thousands of Americans march every week in cities across this great nation, it must be remembered that the protest without the vote is of no concern to Donald Trump and his administration.

In every city, there is a personal connection to the U.S. Congress. In too many cases, the member of Congress representing the people of that city and the congressional district in which it sits, is a Republican. It is the Republicans who are giving silent support to the destructive actions of those persons like the U.S. Attorney General, the Director of Homeland Security, and the National Intelligence Director, who are carrying out the revenge campaign of the President rather than upholding the oath of office each of them took “to Defend The Constitution of the United States.”

Just as Trump is gathering election data like having the FBI take all the election data in Georgia from the 2020 election, so must we organize in preparation for the coming primary season to have the right people on ballots in each Republican district, so that we can regain control of the House of Representatives and by doing so, restore the separation of powers and balance that our democracy is being deprived of.

In California, the primary comes in June 2026. The congressional races must be a priority just as much as the local election of people has been so important in keeping ICE from acquiring facilities to build more prisons around the country.

“We the People” are winning this battle, even though it might not look like it. Each of us must get involved now, right where we are.

In this Black History month, it is important to remember that all we have accomplished in this nation has been “in spite of” and not “because of.” Frederick Douglas said, “Power concedes nothing without a struggle.”

Today, the struggle is to maintain our very institutions and history. Our strength in this struggle rests in our “collectiveness.” Our newspapers and journalists are at the greatest risk. We must not personally add to the attack by ignoring those who have been our very foundation, our Black press.

Are you spending your dollars this Black History Month with those who salute and honor contributions by supporting those who tell our stories? Remember that silence is the same as consent and support for the opposition. Where do you stand and where will your dollars go?

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Activism

Post Newspaper Invites NNPA to Join Nationwide Probate Reform Initiative

The Post’s Probate Reform Group meets the first Thursday of every month via Zoom and invites the public to attend.  The Post is making the initiative national and will submit information from its monthly meeting to the NNPA to educate, advocate, and inform its readers.

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iStock.
iStock.

By Tanya Dennis

The National Newspaper Publishers Association (NNPA) represents the Black press with over 200 newspapers nationwide.

Last night the Post announced that it is actively recruiting the Black press to inform the public that there is a probate “five-alarm fire” occurring in Black communities and invited every Black newspaper starting from the Birmingham Times in Alabama to the Milwaukee Times Weekly in Wisconsin, to join the Post in our “Year of Action” for probate reform.

The Post’s Probate Reform Group meets the first Thursday of every month via Zoom and invites the public to attend.  The Post is making the initiative national and will submit information from its monthly meeting to the NNPA to educate, advocate, and inform its readers.

Reporter Tanya Dennis says, “The adage that ‘When America catches a cold, Black folks catch the flu” is too true in practice; that’s why we’re engaging the Black Press to not only warn, but educate the Black community regarding the criminal actions we see in probate court: Thousands are losing generational wealth to strangers. It’s a travesty that happens daily.”

Venus Gist, a co-host of the reform group, states, “ Unfortunately, people are their own worst enemy when it comes to speaking with loved ones regarding their demise. It’s an uncomfortable subject that most avoid, but they do so at their peril. The courts rely on dissention between family members, so I encourage not only a will and trust [be created] but also videotape the reading of your documents so you can show you’re of sound mind.”

In better times, drafting a will was enough; then a trust was an added requirement to ‘iron-clad’ documents and to assure easy transference of wealth.

No longer.

As the courts became underfunded in the last 20 years, predatory behavior emerged to the extent that criminality is now occurring at alarming rates with no oversight, with courts isolating the conserved, and, I’ve  heard, many times killing conservatees for profit. Plundering the assets of estates until beneficiaries are penniless is also common.”

Post Newspaper Publisher Paul Cobb says, “The simple solution is to avoid probate at all costs.  If beneficiaries can’t agree, hire a private mediator and attorney to work things out.  The moment you walk into court, you are vulnerable to the whims of the court.  Your will and trust mean nothing.”

Zakiya Jendayi, a co-host of the Probate Reform Group and a victim herself, says, “In my case, the will and trust were clear that I am the beneficiary of the estate, but the opposing attorney said I used undue influence to make myself beneficiary. He said that without proof, and the judge upheld the attorney’s baseless assertion.  In court, the will and trust is easily discounted.”

The Black press reaches out to 47 million Black Americans with one voice.  The power of the press has never been so important as it is now in this national movement to save Black generational wealth from predatory attorneys, guardians and judges.

The next probate reform meeting is on March 5, from 7 – 9 p.m. PST.  Zoom Details:
Meeting ID: 825 0367 1750
Passcode: 475480

All are welcome.

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Activism

COMMENTARY: The Biases We Don’t See — Preventing AI-Driven Inequality in Health Care

For decades, medicine promoted false assumptions about Black bodies. Black patients were told they had lower lung capacity, and medical devices adjusted their results accordingly. That practice was not broadly reversed until 2021. Up until 2022, a common medical formula used to measure how well a person’s kidneys were working automatically gave Black patients a higher score simply because they were Black. On paper, this made their kidneys appear healthier than they truly were. As a result, kidney disease was sometimes detected later in Black patients, delaying critical treatment and referrals.

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Sen. Akilah Weber Pierson, M.D (D-San Diego). File photo. Sen. Akilah Weber Pierson, M.D (D-San Diego). File photo.
Sen. Akilah Weber Pierson, M.D (D-San Diego). File photo.

By Sen. Akilah Weber Pierson, M.D., Special to California Black Media Partners 

Technology is sold to us as neutral, objective, and free of human flaws. We are told that computers remove emotion, bias, and error from decision-making. But for many Black families, lived experience tells a different story. When technology is trained on biased systems, it reflects those same biases and silently carries them forward.

We have seen this happen across multiple industries. Facial recognition software has misidentified Black faces at far higher rates than White faces, leading to wrongful police encounters and arrests. Automated hiring systems have filtered out applicants with traditionally Black names because past hiring data reflected discriminatory patterns. Financial algorithms have denied loans or offered worse terms to Black borrowers based on zip codes and historical inequities, rather than individual creditworthiness. These systems did not become biased on their own. They were trained on biased data.

Healthcare is not immune.

For decades, medicine promoted false assumptions about Black bodies. Black patients were told they had lower lung capacity, and medical devices adjusted their results accordingly. That practice was not broadly reversed until 2021. Up until 2022, a common medical formula used to measure how well a person’s kidneys were working automatically gave Black patients a higher score simply because they were Black. On paper, this made their kidneys appear healthier than they truly were. As a result, kidney disease was sometimes detected later in Black patients, delaying critical treatment and referrals.

These biases were not limited to software or medical devices. Dangerous myths persisted that Black people feel less pain, contributing to undertreatment and delayed care. These beliefs were embedded in modern training and practice, not distant history. Those assumptions shaped the data that now feeds medical technology. When biased clinical practices form the basis of algorithms, the risk is not hypothetical. The bias can be learned, automated, and scaled.

For us in the Black community, this creates understandable fear and mistrust. Many families already carry generational memories of medical discrimination, from higher maternal mortality to lower life expectancy to being dismissed or unheard in clinical settings. Adding AI biases could make our community even more apprehensive about the healthcare system.

As a physician, I know how much trust patients place in the healthcare system during their most vulnerable moments. As a Black woman, I understand how bias can shape experiences in ways that are often invisible to those who do not live them. As a mother of two Black children, I think constantly about the systems that will shape their health and well-being. As a legislator, I believe it is our responsibility to confront emerging risks before they become widespread harm.

That is why I am the author of Senate Bill (SB) 503. This bill aims to regulate the use of artificial intelligence in healthcare by requiring developers and users of AI systems to identify, mitigate, and monitor biased impacts in their outputs to reduce racial and other disparities in clinical decision-making and patient care.

Currently under consideration in the State Assembly, SB 503 was not written to slow innovation. In fact, I encourage it. But it is our duty must ensure that every tool we in the healthcare field helps patients rather than harms them.

The health of our families depends on it.

About the Author 

Sen. Akilah Weber Pierson (D–San Diego) is a physician and public health advocate representing California’s 39th Senate District.

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