This industrywide but obscure practice is called the dealer markup.

Over several decades, laws and federal actions have pried open the credit process. Under fair housing laws, for example, all points and commissions must be specifically disclosed. More recently, banks and other major lenders have spend millions of dollars on credit systems that screen out subjective bias.

But there is no legal requirement that car dealers or lenders must tell consumers about the role dealers play in setting the interest rate on dealer-arranged car loans. At the dealership, the ultimate decision about a loan’s cost is left to the discretion of an employee who profits immediately by charging the highest possible rate, even though the dealer has no money at risk.

Now this markup practice is coming under legal attack.

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