Nissan Settlement

A year or so ago, attorneys charged that the finance unit of Nissan Motor had discriminated against black and Hispanic car buyers by charging them higher interest rates than those charged to white buyers. According to the article in a recent New York Times by Johnathan D. Glater, a settlement has finally been reached. Under the terms of the settlement Nissan Motor Acceptance Corporation agreed that it "will offer pre-approved loans to hundreds of thousands of current and potential black and Hispanic Nissan owners, and will limit how much it will raise the interest charged to car buyer above a minimum acceptable rate. The finance company will contribute $1 million to America Saves, a nonprofit program that tries to help low-income people to save a build wealth. The settlement will also result in the payment of $5,000 to $20,000 to the 10 people named in the class-action lawsuit."

Nissan pointed out that it was common in the automobile industry to charge a higher rate for higher risk, much as the pricing of bonds and stocks is related to risk. It is especially interesting to note that the plaintiffs did not charge Nissan with racial discrimination, since the race of applicants for auto loans is not shown on the application for auto loans. However, dealers may add percentage points, and "dealers could be biased."