Arizonans To Benefit From $550 Million Predatory Auto Loan Settlement
More than 12,000 Arizonans are expected to benefit from a settlement over subprime auto loans.
Santander Consumer USA is one of the nation’s biggest subprime auto lenders. The company, which operates a large call center in Mesa, often works with higher-risk borrowers. Thirty-three states and the District of Columbia accused Santander of predatory lending, charging excessive fees and extending high-interest loans they knew people couldn’t afford.
In a news release Arizona Attorney General Mark Brnovich said: “Buying a car is one of the most important purchases a person makes in their life and companies involved in any transaction need to be as transparent as possible. Santander knowingly put Arizonans into loans they couldn’t afford, setting them up for years of financial hardship.”
Brnovich said More than 12,000 Arizona consumers will receive between $22.7 million and $41.5 million of relief (through restitution checks, in-kind relief or debt forgiveness).
In addition to paying $65 million in restitution, Santander Consumer will forgive nearly $500 million in car loan debt to borrowers across the country.
In a written statement to investors the company said: “Over the last several years, we have strengthened our risk management across the board —improving our policies and procedures to identify and prevent dealer misconduct, and tightening standards to ensure affordability.”
Most financing is arranged through dealerships, and lenders are supposed to review borrowers’ applications. The states alleged Santander Consumer failed to verify information on auto-loan applications and accepted income figures without requiring documentation.