WASHINGTON — Sen. Elizabeth Warren is seeking detailed information from the nation’s five largest auto lenders about their lending practices toward active-duty military personnel, citing evidence that service members may be paying higher interest rates than comparable civilian borrowers.
In letters sent to the lenders, the Massachusetts Democrat and ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs asked the companies to provide data on loan pricing, terms and interactions with service members seeking auto financing, according to a statement released by the committee.
The letters were sent to Ally Financial, Capital One, JPMorgan Chase, GM Financial and Toyota Financial Services, which Warren described as the largest auto lenders in the United States.
Research Cited
Concerns about higher rates for service members
In the letters, Warren cited research indicating that military borrowers may face higher borrowing costs even when their credit profiles are similar to those of civilian borrowers.
“A recent report showed that between 2018 and 2022, service members with comparable credit scores to civilians were paying interest rates that were on average 0.35 percentage points higher on new car loans and 0.28 percentage points higher on used cars,” Warren wrote in the letters.
Warren said excessive debt can have serious consequences for active-duty personnel, including potential loss of security clearance or limitations on assignments and promotions.
She also noted a long history of allegations that auto dealers and lenders have targeted military borrowers with deceptive or unlawful practices.
Part of Broader Inquiry
The inquiry comes amid what Warren described as reduced oversight of consumer protection issues affecting military families. In the letters, she argued that actions affecting the Consumer Financial Protection Bureau have weakened enforcement intended to protect service members and veterans from abusive lending practices.
Warren said the information requested from lenders would help lawmakers determine whether military borrowers are being treated fairly and what steps may be needed to ensure affordable auto financing for service members.
What’s Being Sought
The senator asked the lenders to provide detailed data comparing:
- Interest rates and loan terms offered to service members versus non-service members.
- Policies and procedures used when active-duty personnel apply for auto loans.
- Interactions with military borrowers seeking financing.
- Steps the companies take to ensure fair access to auto loans for service members.
Warren requested written responses from the companies by March 24, according to the Senate Banking Committee statement.
The inquiry is part of a broader investigation by Warren into the auto-lending industry, including concerns about repossessions and lending practices affecting consumers and military families.
