A consumer group says discriminatory auto loan practices cost consumers as much as $1 billion a year.

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Several studies and lawsuits have accused major auto lenders of marking up loan rates, especially for minority buyers when they finance their vehicles through dealerships. Consumers are led to believe they are receiving a rate based on their credit-worthiness, but they often pay marked-up finances arbitrarily determined by the dealer.

Now, in a new report, the Consumer Federation of America says the practice is encouraged by all of the industry's own finance companies and by top auto lending banks.

The overcharges typically add at least $1,000 to the cost of a car loan for thousands of consumers, most often blacks and Hispanics, said Stephen Brobeck, CFA's executive director.

"Finance markup charges have amounted to a costly skin tax, burdening African-Americans with even higher costs on one of the largest purchases they are likely to make in their lifetimes," said the Rev. Jesse Jackson, president and founder of the Rainbow/PUSH Coalition. "The practice of markup is unethical and immoral and should eventually be determined illegal."

The auto industry recently capped the markup to 3 percentile points, which is a sign the industry is moving away from the worst forms of gouging, the CFA report said. But the 3 percentile points still costs most car loan purchasers at least $1,000, Brobeck said.

The Consumer Federation urges car buyers to get a rate quote from their own bank or credit union before agreeing to auto financing from a car dealer.

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