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Caucasian Men Pay Less Interest for New Vehicles Compared to Minorities

20 March 2000

Caucasian Men Pay Less Interest for New Vehicles Compared to Women, Hispanics or African-Americans With Same Credit Rating

    BANDON, Ore., March 20 Even though they may have identical
creditworthiness, Caucasian men have lower monthly payments on new vehicles
because they pay less interest than Hispanic men and women, African-American
men and women and Caucasian women.
    In a CNW Marketing/Research analysis of nearly 61,000 finance contracts
nationwide on 1999 and 2000 model-year vehicles, white males had an average
monthly payment of $481.  This compares to $498 for African-American women
which over the course of a four-year finance contract amounts to nearly a
$790 difference.
    In terms of interest rates, these identically creditworthy consumers paid
anywhere from an average of 7.25 percent for Caucasian men to 9.0 percent for
African-American women.
    Part, but not all, of the reason for this difference can be found in the
use of manufacturer incentive programs such as low-APR interest rates and
special lease offerings, CNW reports.  While nearly 30 percent of white men
purchase or lease a vehicle on such incentivized programs, only 14 percent of
black females do so.
    All comparisons are for 48-month contracts with $20,000 being financed on
identical baskets of vehicles.

    Vehicle Payment by Ethnic/Gender Group

    The following is based on a $20,000 finance contract.  All individuals
rate an 86 on CNW M/R's Creditworthiness Scale, which is approximately B
paper.
    Contract is for 48 months.

                  Interest            Cost for Compared v Compared v  % Use
                      Rate  Payment  entire 48 Year's Avg     White     Mfg
                                          mo.s                Male  Program
    Yr's Avg         7.75%  $485.92  $23,324.16  $  0.00  -$224.16    21.8%
    White Male       7.25%  $481.25  $23,100.00  $224.16   $  0.00    28.6%
    While Female     7.75%  $485.92  $23,324.16  $  0.00  -$224.16    21.6%
    Hispanic Male    8.25%  $490.61  $23,549.28 -$225.12  -$449.28    17.2%
    Hispanic Female  8.50%  $492.97  $23,662.56 -$338.40  -$562.56    15.3%
    Black Male       8.75%  $495.34  $23,776.32 -$452.16  -$676.32    15.1%
    Black Female     9.00%  $497.71  $23,890.08 -$565.92  -$790.08    13.8%

    Source: CNW Marketing/Research

    Interest rates are rounded to nearest quarter point.