1) The document discusses research on auto lending practices, specifically dealer kickbacks and add-ons. 2) It finds that minority borrowers on average pay higher interest rates than others, and lower-income and credit score borrowers are more likely to experience "yo-yo" scams. 3) Data shows that while most consumers are unaware, over 10% have arbitration clauses added to their loans without fully understanding them.

1. Auto Lending Research Update Josh Frank and Delvin Davis July 10, 2009

2. Share of Dealership Profits

3. Prior Research Shows Race Influences Dealer Kickbacks

4. Industry Data on Add-on Penetration

5. Dealer Kickbacks in US and NC

6. The “Trust Tax” 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Average Rate Excluding Factory Incentives Average Rate Trusted dealer to give a good rate or dealer said they were giving the "best" rate Other borrowers Note: Difference between groups for both rate significant at 5% level.

7. Prevalence of Yo-Yo Scams (on average rates 5 percentage points higher) 4.5% 11.1% 12.0% 25.0% 0% 5% 10% 15% 20% 25% 30% Total Population Credit Score Fair or Poor Income < $40,000 Income $25,000 or less Note: The difference in frequency between lower income and lower credit score groups and the rest of the population was statistically significant

8. Who gets Add-ons (sometimes sold as mandatory or without customer knowledge)

9. Most consumers unaware of Arbitration Yes, 10.6% No-shopped or negotiated to eliminate, 4.9% Don't Know, 67.8% No-never in agreement, 16.7%

10. Profit centers are not substitutes—instead there is “piling on”