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This organization stated that according to the data obtained in the 2004 Federal Survey of Consumer Finance, the average interest rate among those Hispanics buying used cars in 2004 was 9 percent, while that of the rest of the US population was 7.5 percent.
The CFA pointed out that an even more important fact was that a high percentage of Latinos, compared to the rest of the US population, had to pay loans with interest rates of at least 15 percent.
CFA said that 18.5 percent of Hispanics bought used vehicles and were granted this high interest rate compared with 9.2 percent of the rest of the population.
However, when buying new cars, Hispanics and the rest of the US population did not reflect the same discrepancy regarding the figures.
The mean of the interests paid by a Hispanic that bought a new vehicle was 5.5 percent, while that of the country’s population as a whole was 5 percent. And only 1.8 percent of Latino buyers faced interests rates of less than 15 percent, compared to 2.2 percent of the population as a whole.
Stephen Brobeck, Executive Director of CFA, stated that the reason for this disparity between Latinos purchasers of new and used vehicles may be related to their negotiating experience.
“One could speculate that those who recently immigrated, with low income and little experience negotiating low rates, always buy used cars”, Brobeck stated.
“This could help us understand the difference in the interest rates relating to the purchase of used cars, which do not exist with regard to the purchase of new cars”, he added.
Ángelo Gonzáles, representative of the National Cuban-American Council (CNC for its initials in Spanish) explained that “in Miami, this is an especially critical matter. For Hispanics, achieving economic statility and the dream of the middle class is connected with access to job opportunities.”
Though Miami has a public transportation system, it does not provide access to all the areas of the city. Therefore, a car is a necessity for may Hispanics and, of course, for many US citizens”, he added. González also pointed out that in Miami, Hispanics that have recently entered the US “are frequently referred to buying a vehicle in dealerships that offer high-interest packages and where financing is arranged for at that place and that time.”
“These buyers are largely unaware that they can obtain financing through other institutions, such as Banks or the Credit Union. It is common for Hispanics who want to buy a car to have difficulties finding reasonable financing options and that they end up paying high-cost loans”, he said.
Patty Briotta, representative of the National Association of Federal Credit Unions (NAFCU) said that one of the main measures that Hispanics must practice to avoid paying high interest rates when they buy a car is to “contact their Credit Union and get a loan”.
“If they do their research beforehand and even ensure the preapproval of their loan through the Credit Union, they are able to compare financing rates and greatly improve their negotiation capabilities”, Briotta added.
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