Ford Credit has fired back against charges that it has discriminated against Hispanic car loan borrowers by charging them more interest than non-Hispanic customers. The bias claim is made in a Chicago federal district court suit filed on behalf of Hispanic buyers. It is the second and largest suit filed over the issue of inflated loan rates to a minority group.

The first suit was on behalf of African-American customers of Nissan Motor Acceptance Corp. and is still pending in a Nashville, Tenn., federal district court.

In response to a study of more than 6 million loans to black car buyers, authorized in the Ford Credit suit, the Ford Motor Company subsidiary declared it “would never discriminate based on age, race or ethnicity. It’s not the way we do business here at Ford.”

The study contended that, without advising Hispanic borrowers of the inflated interest rate, in the 1997-2001 period Ford Credit collected an average payment on vehicle loans of $348 from Hispanics and $341 from non-Hispanics. Total finance charges reached an average of $5,893 on an interest rate of 13.9 percent from Hispanics, the study said, compared to $5,453 and 12.9 percent from non-Hispanics.

The suit alleges that Ford Credit boosted the rates to Hispanics regardless of their credit ratings. Dealers were told to “maintain this practice in secret,” the bill complaint states. However, in a rebuttal statement, Ford Credit says a statistician hired by the plaintiffs misrepresented numbers provided by Ford in a way suggesting discrimination.

Richard Voith, senior vice-president of EconSult, a Philadelphia financial research firm, calculated that the average loan markup assessed by Ford dealers to customers with Hispanic surnames was 3.46 percentage points, against 2.78 percentage points for loans to those with non-Hispanic names.

Ford Credit notes that the interest rate secured by a buyer depends often on the individual’s credit history and negotiating skills. It denies instructing or compelling F&I managers to charge a higher rate to Hispanic buyers, explaining that dealership personnel are free to construct their loan deals in accordance with state and federal regulations.

"Ford Credit has no direct contact with the customer during the approval process," said Ford Credit spokesman Dan Jarvis. "When we evaluate credit applications, we do not know the race, gender or ethnicity of auto buyers," he said, adding, "We simply look at objective measurable criteria, such as credit history, income-to-debt ratio and a statistical analysis of the customer's ability to make payments."

The plaintiffs in the suit, Rodriguez v. Ford Credit, hired Voith to conduct a study in the course of a motion seeking class-action status for their complaint. The motion was denied on the grounds that numerous legitimate matters influence interest rates charged and credit pricing.