American Honda, 3 banks settle loan-Racial bias suits with Black Customers

American Honda Finance Corp. and three banks have settled class-action lawsuits brought by black customers who accused them of racial bias in automobile lending policies. The suits alleged that company policies routinely allowed car dealers to charge black customers higher interest rates on auto loans than were given to whites with similar financial histories. American Honda and the three banks - Bank One, Bank of America Corp. and U.S. Bancorp - will set tighter caps on how much car dealers can increase interest charges on car loans. The settlements, awaiting approval in U.S. District Court in Nashville, include a stipulation that the four lenders will offer car loans without markups to up to 2.4 million minority consumers. The banks agreed to cap markups at 2.5 percent on loans up to 60 months, 2 percent on loans between 61 and 71 months and 1.75 percent on loans of 72 months or more. Bank One will offer 875,000 preapproved loans without markups to blacks and other minorities, Bank of America will offer 600,000 of the loans and U.S. Bancorp will offer 300,000. American Honda, which originally allowed markups as high as 3.5 percent, will impose caps of 2.25 percent on loans of up to 60 months and caps of 2 percent on loans of more than 60 months. The lender will offer 625,000 preapproved, no-markup loans to minorities. [more]