In 1975 Congress passed the Home Mortgage Disclosure Act, to prevent banks from charging higher interest rates to minorities. In the past, banks were engaged in a system called redlining. Redlining was a system used to charge higher interest rates to minorities living in certain zip codes. Recently, finance companies and car dealerships resumed this practice in the financing of automobiles.
In this article, the New York Times details the government’s investigation into car dealerships charging “dealer markups” where dealerships tack-on additional interest to a borrower’s loan. This practice is used to charge minority borrowers higher rates than white ones with similar credit profiles. Over a year ago, Ally Financial, a company that finances car purchases, often at high interest, agreed to pay $80 million to auto buyers as part of a settlement for charging minorities higher interest rates.
At Olstein Law, we meet with many consumers who are paying exorbitant interest rates on their automobiles and are struggling to make their monthly payments. If you are struggling to make your automobile payments, and you have a high interest rate, there are options. Contact Joseph Olstein at Olstein Law today, so you can discuss if you can lower your car payment and modify your car loan.