WASHINGTON — A Consumer Federation of America (CFA) analysis of the most recent Federal Reserve Board Survey of Consumer Finances reveals that more than half the vehicles purchased by Latinos in the U.S. are used, and that they pay much higher loan rates on those purchases than other groups.

In 2004, Hispanic-Americans paid a typical (median) rate of 9.0 percent loans for used-car purchases compared to a typical rate of 7.5 percent for all borrowers. Moreover, 18.5 percent of all Latino borrowers paid an interest rate of at least 15 percent, compared to only 9.2 percent of all Americans.

There were not, however, large disparities in typical loan rates for new cars — 5.5 percent for Hispanic-Americans vs. 5.0 percent for all Americans. And the percentage of these loans over 15% for both groups was small and nearly the same: 1.8 percent for Latinos, 2.2 percent for all Americans.

"One could speculate that recent immigrants with low incomes and little experience negotiating low loan rates almost always purchase used cars," said Stephen Brobeck, executive director of the Consumer Federation of America (CFA), which oversees the Hispanic America Saves campaign. "That could help account for the loan rate gap for used car purchases, which does not exist for new car purchases."

“We’ve seen recent immigrants struggle with high-interest car loans, and in the worst cases it can decimate their finances. But at the same time, owning a car provides access to jobs and opportunities. That’s why we work to provide consumers with advice and support on smart car buying, so buying a car can be a stepping stone to financial stability, not a barrier,” said Angelo Gonzalez, director of the economic independence project at the Cuban American National Council (CNC).

Detailed research by academics earlier this decade of data on millions of auto loans revealed that minorities were far more likely to have their auto loan rates marked up than non-minorities. As a result, courts ordered most major car finance companies to cap rates, usually at 2-3 percentage points above the buy rates, and provide funds for minority-related consumer education.