50 years after equal loan rights, women pay more to finance cars
Lenders had the right to deny women loans and charge higher rates based on their sex until Congress passed the Equal Credit Opportunity Act (ECOA) in October 1974.
In 1976, the ECOA expanded protections against lending discrimination based on sex and marital status to include race, color, national origin, age, recipients of public assistance income, and people who exercise their rights under consumer protection laws.
But auto loan gender discrimination didn’t disappear overnight. Two years after the act passed, a senior vice president at a Kansas City bank told The New York Times he would take the fact that a woman had young children into account when considering her loan application “because if the children were sick, the wife might have to stay home from work to take care of them.”
Single women also had difficulty securing loans without male co-signers. A “young woman who was pretty” faced extra scrutiny because “she might get married and get pregnant,” a Seattle banker told The Times.
Women have a much easier time securing auto loans at fair rates today. But there’s still a slight pink tax on dealership financing interest rates, according to the 2022 study “Inequalities in Dealers’ Interest Rate Markups? A Gender and Race-based Analysis.”[1]
| Gender | Interest Rates | Total Interest Paid (Based on Average New Vehicle Transaction Price) | Average Annual Income Minus New Vehicle Transaction Price* |
|---|---|---|---|
| Women | 6.89% | $8,727 | $3,601 |
| Men | 6.87% | $8,700 | $13,591 |
*Based on a new vehicle transaction price of $48,759 (Cox Automotive) and NWLC income data.
Women experience markups of 0.6%, or 0.73 basis points, on dealership auto loans, the study found. The gender gap is low on an individual basis, amounting to an additional $9 for women over five years. Still, U.S. dealer markup for female car buyers adds up to $40.3 million annually.
The financing gap is only significant in Republican-voting counties, which the study notes may be “markets where men are likely to view women’s progress as a barrier to their success.” About 38% of Republican men say women’s gains have come at the expense of men, compared to 19% of Democrat men, according to Pew Research polling.
Men own more cars than women as vehicle prices rise
| Year | Percentage of Women Who Own Vehicles | Percentage of Men Who Own Vehicles |
|---|---|---|
| 2020 | 56% | 57% |
| 2021 | 59% | 60% |
| 2022 | 61% | 61% |
| 2023 | 67% | 68% |
| 2024 | 65% | 68% |
The gender gap in vehicle ownership is small but growing, according to Insurify data. More men have owned cars than women for the past five years, except in 2022, when ownership rates were equal. The gender difference in car ownership remained at 1% during 2020, 2021, and 2023, but early data from 2024 shows the gap widening to 3%.
Surging new vehicle prices could contribute to the widening gender divide. A new vehicle costs an average of $48,759, which is $8,336 more than in December 2020, according to Cox Automotive.
Men make an average of $62,350 annually, and women make $52,360, according to NWLC data. As vehicle prices rise, car ownership becomes increasingly unaffordable on an income of $52,000.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.