That rise has been matched by a strengthening market for securities backed by such loans. Auto loan originations increased in the third quarter, to $97.4 billion, the highest level since the third quarter of 2007, adjusted for inflation,Īccording to a report from the Federal Reserve Bank of New York. That concern has prompted a number of government investigations into the growing business of auto lending. To discriminatory lending against minorities. “Individual consumers usually don’t even know that they’ve been marked up,” said Rosemary Shahan, the president of Consumers for Auto Reliability and Safety, a nonprofit consumer advocacyĭealerships are not required to disclose what percentage of the interest rate goes to them, and consumer advocates and some regulators are concerned that dealers’ ability to decide how much to charge has led Dealers can decide how much they want to chargeįor that service and tack their fee onto the lender’s interest rate. Lantigua’s lawyer, Kathi Rawls.ĭealers often arrange loans for car buyers through third-party lenders, providing something of a one-stop shop for about 80 percent of all consumers who need financing. Lantigua’s loan through Ally Bank, according to Mr. Lantigua said he did not know that his 12.6 percent interest rate included about $1,000 for the dealership, David StanleyĬhevrolet, which arranged Mr. Lantigua agreed to pay $609 a month, meaning he would own the truck in about six years. Lantigua actually knows how much he spent on that service, but only because the details came out when he sued the dealer for breach of contract related to his trade-in. Like millions of Americans, he agreed to a loan arranged by the dealer. | When Pedro Lantigua, a 32-year-old truck driver from Oklahoma City, decided to trade in his vehicle last summer, he walked into his local dealership andĭrove off with a brand-new Chevrolet Silverado. Credit Nick Oxford for The New York Times Pedro Lantigua of Oklahoma City saw his vehicle loan documents only after filing a lawsuit.
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