Honda allegedly charged minorities higher interest rates, will pay $24 million to settle
Honda charged thousands of minorities higher interest rates than white borrowers on auto loans, according to a Justice Department complaint filed in a federal court in Los Angeles. The auto finance arm of Honda agreed to pay the affected minority borrowers $24 million to settle the dispute. Minority borrowers were paying $150 to $250 more than white borrowers, according to investigations led by the Justice Department and the Consumer Financial Protection Bureau.
Honda's finance arm gets loan applications from car dealers, who are allowed to vary a loan's interest rate - and mark it up to as much as 2.25 percent - based on the borrower's creditworthiness. The discriminatory rates were happening within those mark-ups.
In addition to the monetary settlement, Honda has promised to restructure its auto financing program, as well as pay the Justice Department an additional $1 million to fund an auto consumer financial education program.
Cover image: Car and Driver