CRA Insights

Fair lending considerations for auto finance payment deferrals related to COVID-19

June 4, 2020

Many auto finance providers have responded to the COVID-19 crisis by offering deferred payment options and other forms of financial assistance to their borrowers. Because these policies were created under significant time and resource constraints, auto finance providers should be especially prudent in considering any fair lending risk that they may create. In particular, they should evaluate:

  1. The degree of judgment involved in their deferment process and whether the lack of a universal deferment policy could lead to differential outcomes across protected classes,
  2. The factors considered in allowing or disallowing deferment and whether these factors have a sufficient business justification,
  3. The methods by which different borrowers are alerted of their deferment options and whether these methods could result in disparate treatment for different groups, and
  4. Their capacity to electronically store the factors used in making decisions on individual borrowers so statistical fair lending testing can be done quickly and easily.

In this Insights, the authors discuss how lenders can evaluate potential fair lending risks as they roll out financial relief options to customers.

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