(NBC Latino) For many Latino families, average household incomes in the past decade have gone down. Hispanics lost 66 percent of their household wealth following the Great Recession, and unemployment has been high among Latinos. This has resulted in two things. Households have reduced spending, but for big expenditures like mortgages, automobiles and higher education, families have to take on additional debt.
Yet in the area of student loans, and even more so with auto loans, Latino families are still being steered in many cases toward riskier and even predatory loans, according to a new report from the Center for Responsible Lending.
In the case of auto loans, for example, families with low credit scores have basically two options: Applying for a loan over the internet with a lender the consumer has never heard of, or financing through the car dealer. Low-income consumers or those with poor credit, for example, are more subject to yo-yo scams, where the dealer changes the terms of the initial loan yet refuses to give money back to the family if they don’t agree, and even threatens the consumer with auto theft if the buyer does not immediately return the car. Most families agree to the changes and pay interest rates of 5 percentage points or higher than conventional loans.