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Santander Pays $25 Million to Settle Subprime Loan Complaints
Banco Santander SA has agree to pay $25 million to settle claims it used illegal practices to push subprime car loans on U.S. consumers with poor credit.
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Banco Santander SA has agree to pay $25 million to settle claims it used illegal practices to push subprime car loans on U.S. consumers with poor credit.
The lender’s Santander Consumer USA Holdings Inc. unit will pay $22 million to Massachusetts and $3 million to Delaware. Officials say the agreement sets a template for similar cases in other states.
In the worst case of predatory lending, Santander approved a loan that cost a buyer in Massachusetts $10,000 for a $750 vehicle. The state says the lender violated consumer lending laws through poor oversight and lax management.
Santander Consumer USA is the largest packager of subprime car loan in the U.S., according to Bloomberg News. The news service cites a Morgan Stanley analysis that says one-third of car loans being bundled into bonds are “deep subprime” compared with 5% in 2010.
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