Vehicle purchases

We study vehicle purchases made by SCF households in the three years preceding the survey.3 Only households that took out a loan to finance the vehicle purchase are studied, and we exclude the handful of households that report not making monthly loan payments. We drop cases where the head’s race is neither White nor Black and where there is missing data for any of the control variables described below. In addition, we only use the most recent vehicle purchase for households with more than one such purchase during the three year window. We use the SCF core sampling weights in the analysis that follows. In total, our vehicle loan sample contains 3,045 households, 10.5% of which were Black.
Panel A of Table 1 reports average loan features in the loan sample. There is no statistically significant racial difference in original loan amounts or the length of the loan. However, the loans to Black and White vehicle purchases differ on every other dimension. In particular, Blacks are less likely than Whites to have purchased a new vehicle, and are dramatically more likely to have obtained a vehicle finance company loan. The Table also indicates that the interest rates paid by Blacks are on average a full 100 basis points higher: 10.6% versus 9.6%. Consistent with the similarities in loan amount and length and different interest rates, Blacks have higher monthly vehicle loan payments.

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