Late in the year 2003, the auto financing industry experienced a pandemonium when several discrepancies in car loan markups and interest rates were found in the nations second largest auto lender, GMAC (General Motors Acceptance Corporation).
In a report filed by Vanderbilt University business professor Mark A. Cohen, African Americns were said to be almost three times as likely as whites to be charged markups on car loans which GMAC financed. When markups are added to car loans, the borrower is generally charged a higher-than-normal interest rate.
With these markup charges, black borrowers generally paid an average of $1,229 in extra car loan interest while whites paid only an average of $867 on the same loan financed by GMAC. Cohens analyses was based on the study of more than 1.5 million GMAC car loans made between 1999 and April of the same year Cohen filed the report.
The report said that black postal workers paid an average of $811 on their GMAC car loans more than white postal workers. The report, which was filed Aug. 29 in U.S. District Court in Nashville, further stated that black teachers paid an average of $595 more than white teachers. Even...
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