Consumer finance company General Motors Acceptance Corp. is close to settling a class-action lawsuit alleging that its vehicle loan lending policies harm black car buyers, The Wall Street Journal reported.
Citing the WSJ report, Dow Jones Newswires noted that the move could save consumers millions of dollars a year because, as part of a tentative agreement with African-American plaintiffs, GMAC has offered to put tighter limits on the increases car dealers can impose on interest rates set by GMAC, according to people familiar with the situation.
Dow Jones said that GMAC now allows dealers to tack on as much as 3% to the annual interest rate that GMAC would offer to the consumer based on credit worthiness while the suit alleges that dealers tend to “mark up” loans more frequently and aggressively with blacks than with whites.
Dow Jones also noted that GMAC, the second-largest vehicle lender, as well as top-ranked Ford Credit, are among a dozen lenders targeted since 1998 by bias suits on this issue. Dealers haven’t been named in the suits, the report added.
According to the reports, settlement terms of the GMAC class action are also expected to include the lender’s agreeing to more complete disclosure to customers, as well as changes in how GMAC compensates dealers for arranging loans.
The settlement isn’t final, and the negotiations could still collapse but a final agreement is expected to be announced as early as next week, Dow Jones added.