Santander Consumer USA Holdings Inc. will pay about $26 million to settle accusations that it offered high-interest auto loans to consumers ill-equipped to make the repayments in full, according to multiple media reports.
According to the Boston Globe, about 2,000 consumers in Massachusetts will receive $16 million in relief from the company, while the Massachusetts' Attorney General's office will receive another $6 million to settle the allegations.
Santander Consumer also agreed to pay about $2.9 million to consumers in Delaware impacted by the practices, that state's attorney general's office said in a press release. In addition, the company will pay about $1 million to the Delaware Consumer Protection Fund, which handles matters related to deceptive trade practices and consumer-oriented investigations.
Delaware's investigation, in conjunction with an inquiry in Massachusetts, determined that Santander Consumer allegedly financed auto loans without having a "reasonable basis" that the consumers could afford them, Attorney General Matt Denn's office said in the statement. The lender also estimated that a large percentage of the loans would default and allegedly determined that the reported incomes from consumers used to support the loan applications submitted to the company by car dealers were "often inflated."
As part of the settlement, Santander Consumer neither admitted nor denied the allegations, according to the media reports.