Ally Financial to Pay $98 Million For Discriminatory Auto Loans

In the largest settlement of any auto-loan discrimination case, Detroit-based Ally Financial has agreed to pay $98 million in fines and damages after regulators discovered discriminatory auto loan practices by its dealerships.

Ally Financial, formerly GMAC, has settled regulatory claims by the Department of Justice and the Consumer Financial Protection Bureau (CFPB). The claims said African-American borrowers were being charged an average of $300 more than their non-Hispanic white counterparts for their auto loans. Hispanics paid about $200 more.

In March 2015, the CFPB announced it would begin regulating non-bank auto lenders like Ally. These lenders make up 40 percent of the auto-loan market, lending to over 7 million consumers every year. The goal of the regulation was to crack down on “dealer financing” - where the car dealers act as middlemen between the buyer and the lender.

In Ally's case, the lender arranged loans through its dealers who were allowed to quote higher rates to their customers beyond what their credit history would indicate. Because Ally Financial did nothing to keep its dealers from charging minority buyers higher rates, it was responsible for the costs charged to its 235,000 minority consumers.

Because of its discriminatory auto loan policies, Ally Financial has agreed to pay $98 million in fines and consumer costs. Of that amount, $80 million will go to African-American, Hispanic, and Asian Americans, and Pacific Islanders who got auto financing through Ally Financial between April 2011 and December 2013.

The team at The Liblang Law Firm, P.C., are ready to take your calls about Ally Financial's discriminatory lending practices. The Equal Credit Opportunity Act (ECOA) prohibits creditors from discriminating against minorities in its loan applications and lending rates. Consumers whose rights are violated can sue the lender directly.

The Liblang Law Firm, P.C., has also represented consumers in “yo-yo lending” cases – where a dealer delivers a vehicle to the consumer, leading him or her to believe their loan has been approved, only to demand it back a week or so later because the “financing fell through.” Michigan law requires dealers to honor a consumer's written contract, even if they are later unable to sell the financing contract to the anticipated lender. If the dealer cancels the contract or tries to raise the rate, the consumer may have a case against the lender.

Dani K. Liblang at The Liblang Law Firm, P.C., is a consumer protection attorney with over 30 years' experience. If you have been harmed by Ally Financial's discriminatory lending policies, she may be able to help you file your claim. Contact the Liblang Law Firm, P.C., to find out if you you qualify.