Reuters reports that the credit arm of GM has reached an out of court settlement in a racial bias class-action lawsuit that said it charged blacks more than whites for car loans.
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The lawsuit alleged that black car buyers collectively paid millions of dollars more interest for loans than whites even though they were just as creditworthy.
The GMAC lawsuit was filed in 1998, when it was alleged that some black consumers were charged finance rates as high as 33 percent on car loans.
The settlement included no payments to the plaintiffs, whose legal fees and expenses are capped at a total $9.6 million, Reuters said.
General Motors Acceptance Corp. (GMAC) agreed for three years to cap the mark-up in financing rates that dealers can charge consumers on car loans to 2.5 percent, or 2 percent for loans lasting longer than 60 months, the parties said, according to Reuters.
Cutting the finance rate will save consumers an estimated $60 million a year, Darnley Stewart, a partner with the law firm of Bernstein Litowitz Berger & Grossmann, which represented plaintiffs in the case, told Reuters.
GMAC said in a statement that the settlement “preserves fair competition while taking new steps to provide GMAC consumers with the knowledge to make the most informed choice for their auto financing.”
The case was one of several class-action lawsuits filed against major car loan companies in the United States alleging that their practices discriminate against minorities, Reuters said.
