Predatory Auto Loans Targeting Latinos


Latinos are often falling victim to risky and sometimes predatory student and auto loans, according to a report from the Center for Responsible Lending.
The problem has been compounded by the fact that Latino household wealth dropped 66 percent after the Great Recession, forcing many to take on new debt to make ends meet, according to a recent article.
Auto loans for families with low income and/or credit scores have been difficult to come and by and the resulting process has left many at a disadvantage, according the article. Car buyers in 2009 paid more than $25 billion in added interest due to dealer markup, an arrangement that lets dealers hike the interest rate after the initial offering and agreement. Car buyers borrowing from subprime finance companies were 33 percent more likely to get their cars repossessed, research shows.
As more Latinos go after a higher education, more are facing crippling student loan debt. While the average student graduates with about $25,000 of debt, 8 percent of Latinos had debt of more than $40,000.
Graciela Aponte, a communications and policy analyst at the Center for Responsible Lending, says Latino families should seek out non-profit centers for financial counseling before getting a car or student loan.
“Many of these predatory lenders are targeting Latinos, or other minorities and military families,” She said. “Unfortunately you do have people looking to offer some families the worst, higher-fee products, so you have to be on the lookout.”