Hidden auto financing charges cost consumers $1 billion each year, and blacks and Hispanics are particular targets, a consumer advocacy group contended Jan. 26, according to an Associated Press (AP) report.

When a car buyer arranges financing through an auto dealer, lenders quote a finance rate based on the buyer's credit history. In some cases, dealers are increasing that rate by several percentage points and sharing the profit with lenders, the Consumer Federation of America said.

The National Automobile Dealers Association (NADA) responded that the charges are fair compensation for dealers who set up financing. "The rate provided by finance companies to dealers is a wholesale rate," the association said in a statement. "It's the same as the difference between what McDonald's pays for a hamburger and what we pay for it. The McDonald's markup is undisclosed."

NADA also said consumers are free to shop around if a quote seems too high, according to AP.