New Study Reveals Your Skin Color Might Be the Reason You Paid Too Much for Your New Car
Transportation is crucial for almost every person in the United States. So unless someone lives within walking distance to all their needs and obligations, accessing reliable transportation is a must. Unfortunately, many individuals don’t have reliable access to public transportation. Such a conundrum creates the need for an automobile.
Discrimination based on skin color has proven to take so many shapes and forms. From mortgage lenders to automobile sales, the reality is non-white people are often not treated equally when making big purchases like a home or car. In an effort to shed light on these facts, the National Fair Housing Alliance went undercover.
The methodology used to uncover the truth behind auto purchase discrimination is clear-cut. NFHA used eight different non-white and white pairs to visit eight different Virginian car dealerships. Each pair was matched up based on gender and age, however, each non-white secret shopper had a better financial situation than their white secret shopper counterpart. The findings below prove that the color of your skin may be the reason you paid too much for your new car.
1. Non-white testers received higher pricing options
Despite every non-white tester having a better credit and financial disposition, white testers were offered lowered pricing options than their non-white counterpart five out of eight times. So when it came to payments, salespeople quoted non-white testers $2,662.50 more on average for the life of the loan.
Next: Preferential treatment goes beyond the office.
2. White testers were offered rebates, non-white testers were not
Salespeople were willing to break policies and call in favors in order to help white testers wiggle into a better price. In fact, one salesperson offered to call in a favor with his pal at a credit union in an effort to bump up a white tester’s credit score. One dealership offered a rebate to a white tester. Another offered a college and military discount, neither of which the white tester was qualified for.
Next: Should getting loan details be this difficult?
3. Non-white testers had difficulty getting the details of a loan
As any car buyer is aware, the interest rate on an auto loan is a critical piece of the car buying puzzle. For one non-white tester, even after receiving a firm interest rate, the car salesperson and financial officer would not clearly articulate other details relevant to the sale. When the tester asked questions for clarity, the employees continued to give contradictory answers.
Next: How far does good credit get you these days?
4. White testers received lower-cost financing, even though their credit was worse
Not only did non-white testers receive more expensive pricing on vehicles 62.5% of the time, but they also received fewer financing options 75% of the time. Keep in mind that these figures reflect pricing and options in favor of white testers whose credit scorses were less favorable.
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5. White testers were taken more seriously when searching for a vehicle
When white testers expressed interest in purchasing a vehicle, salespeople were much more accommodating. By pulling credit scores and prompting the white tester to fill out an application, they were provided with solid answers on financing. By contrast, when non-white testers inquired about pricing on a vehicle, salespeople provided them with the average cost of financing, nothing further.
Next: Why should a person’s skin color impact the level of respect received?
6. Non-white testers outwardly received disrespectful treatment
Shamefully, salespeople and financial officers were outwardly disrespectful to non-white testers in comparison to white testers. When a non-white tester informed one financial officer that he wanted to keep his wife in the loop on financing options, the officer replied, “Yeah, I kind of tell her what I’m doing and then I go out and I just do it.”
Next: Will stronger regulations fix the problem?
7. The auto industry is just as discriminatory as mortgage industry
It was due to the discrimination within the mortgage industry that laws and regulations were implemented to intervene. Research and undercover studies have been conducted as far back as 1991 in order to prove the level of discrimination in the auto industry. Every study mirrors the one prior, indicating direct discrimination toward non-white buyers.
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8. Car dealers were very vague and unclear when it came to pricing
It’s the vague and ambiguous structure surrounding the auto industry’s pricing that allows salespeople and financial officers to misconstrue the rules. Because of the lack of regulation, salespeople can discriminate against whomever they choose.