Business

Honda to pay $25M for overcharging minority buyers on loans

Japanese automaker Honda has agreed to pay $25 million to settle US claims that it discriminated against minority buyers by overcharging them for auto loans, US authorities announced Tuesday.

American Honda Finance Corporation, a unit of Honda based in California, generally discriminated against African-American, Hispanic and Asian borrowers in lending, said the US Justice Department and the Consumer Financial Protection Bureau.

American Honda Finance offers financing to car buyers through auto dealers.

The government alleged that minority borrowers were charged higher interest rates “because of their race or national origin and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk.”

For instance, they said, the average African-American borrower paid over $250 more during the loan term because of discrimination, while for Hispanics it was over $200 and for Asians over $150.

Under the settlement agreement, Honda will pay $24 million in compensation for alleged victims and $1 million to fund a consumer financial education program for minorities.

Honda also has agreed to significantly limit the markup in interest rates the dealers can charge, they said.

To read this article in its entirety visit: MSN.com 

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Michael Bailey

Michael Bailey is the Chief Curator of Information at The MinorityEye a nationally recognized news blog that focuses on news, events and issues relevant minority communities. He is also an Integrated Marketing Communication Specialist at TME Media Group. His firm provides consulting and training services to non-traditional entrepreneurs as well as corporate, state and local agencies on how to develop integrated marketing strategies that connect with minority consumers.

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