2 Automakers’ Units Accused of Loan Bias

Civil rights lawyers on Wednesday filed lawsuits in the Bay Area against units of Toyota and Honda, alleging the automakers discriminated against Latino and African American customers by charging them higher interest rates on loans than whites with similar credit histories.

Lawsuits were filed in Alameda Superior Court against American Honda Finance Corp., the lender for Honda Motor Co., and WFS Financial Inc., an independent auto lender based in Irvine. Another suit was filed in San Francisco Superior Court against Toyota Motor Credit Corp., the lender for Toyota Motor Corp.

Together, the three companies were responsible for $59.1 billion in loans in 2001, said Bill Lann Lee, a former assistant attorney general at the Justice Department and a lawyer for the plaintiffs in the loan suits.

Lee said that after the auto lenders established a basic interest rate for customers based on their credit histories, dealers were then authorized to “mark up” additional interest points, and that income was split by dealers and the lenders. The lawsuits claim that African American buyers paid on average an extra $1,000 in “mark up” payments, while white customers with similar financial histories paid less than $500.

American Honda said it had not seen the lawsuit and could not comment. WFS officials could not be reached. Toyota spokeswoman Cheryl Burnett said only that the company had placed a cap of 3% on additional points to a loan’s interest rate.

One example cited in the suits involved agricultural worker Joaquin Andrade, who was charged more than $3,100 in interest on a loan of only $6,500 to buy a car. Lawyers are seeking class-action status for the suits.