Today, Nissan Motor Acceptance Corporation (NMAC) vigorously defended its fair lending history and challenged claims of discriminatory practices brought against it by a group of trial lawyers.
The Plaintiffs allege that NMAC’s business policies allowed Nissan dealers to charge higher finance fees to African American customers than white customers in violation of the Federal Equal Credit Opportunity Act (ECOA).
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Research conducted on behalf of the Plaintiffs by Dr. Debby A. Lindsey analyzed the lending practices of all African-American and white NMAC customers in Tennessee in an effort to demonstrate racial bias on the part of NMAC. However the research did not compare the most relevant issue when comparing lending practices of the two groups — credit worthiness.
“The statistical information submitted by the Plaintiffs’ counsel, upon which they base their lawsuit, is inaccurate and provides no factual data showing a disparate impact on African-Americans,” said Anne Fortney, NMAC’s outside legal counsel. “It is inappropriate and unfair to base claims of discriminatory practices on such analysis.”
NMAC enlisted economist Dr. Harold Black, Vanderbilt University and statistical analyst Dr. Janet Thornton, Economic Research Services to analyze the Plaintiffs’ research. They found numerous inaccuracies in Dr. Lindsey’s report.
“In effect, the Plaintiffs’ study compares apples and oranges,” said Dr. Janet Thornton, Economic Research Services. “Their research inappropriately assumed that the contracts were for African-Americans and white-Americans who had similar credit ratings. This was not the case. They also did not consider any of the other factors that are actually used to determine the cost of credit.”
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By GlobalDataThe actual “cost of credit” in an auto finance contract is determined by several factors, including the consumer’s relative credit-worthiness, the type of vehicle purchased, whether the vehicle is new or used, the length of the contract, the cost of the vehicle, special warranties or other “add-ons,” the value of an trade-in and the amount of any other down payment. Determining the cost of credit to a consumer by this type of non-biased, financial risk-related analysis is a legal, practical and necessary lending practice.
This cost of credit cannot be expressed as merely a percentage amount, sometimes called an Annual Percent Rate. The Plaintiffs’ research only considered the contract dollar cost of credit for each customer, with no analysis of any other fact that could cause two customers to have different actual costs of credit.
“The most important variable to be considered in any financing contract is the applicant’s credit worthiness and the Plaintiff in this case did not have good credit,” added Fortney. “The fact is Ms. Carson’s loan was refused by three other creditors. If NMAC had not purchased the contract, in all likelihood she would have received an even higher rate from a sub-prime lender.”
NMAC does not loan money directly to consumers, and in many states it is prohibited from doing so. Similar to other finance companies, NMAC acquires loans by purchasing them from independent automobile dealers. Automobile dealers make these loans to their customers, typically conditioned upon the dealer’s ability to sell the loan to one of their financing sources. No Nissan dealer is required to sell any loan or any minimum number of loans to NMAC. Therefore, NMAC has no ability to control the finance charge that any customer will pay. If NMAC decides not to buy a loan with a certain finance charge on it, the dealer can still sell that same loan to a different finance source. Therefore, the plaintiffs’ allegations that NMAC or any other finance source can control the amount of finance charges that a dealer’s customer will pay is false.
In North America, Nissan’s operations include automotive styling, engineering, consumer and corporate financing, sales and marketing, distribution and manufacturing. More information on Nissan in North America and the complete line of Nissan and Infiniti vehicles can be found online at www.nissandriven.com or contact the corporate media line at 310/771-5631
