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Nation’s largest subprime auto lender agrees to pay more than $550 million for deceptive auto loan practices

Cars at Car DealerSantander Consumer USA Inc. agreed Tuesday to pay about $550 million or more to consumers nationwide to resolve charges that its subprime lending practices exposed them to high levels of risk with auto loans that had a high likelihood of default. Santander also agreed to make changes to its terms and conditions for extending credit.

“Santander defrauded desperate consumers by placing them into auto loans the company knew these customers could never afford to pay, resulting in defaults and negative ratings on consumers’ credit reports,” said New York Attorney General Letitia James.

In March 2015, a coalition of 34 attorneys general opened an investigation into Santander — the largest subprime auto financing company in the nation – after receiving an increase in consumer complaints on subprime auto loans. The coalition alleged that Santander – through use of credit scoring models that could forecast the risk of borrower default – knew that certain groups of consumers would have a high likelihood of default.

It also alleged Santander failed to monitor dealer behavior to minimize the risk of receiving falsified information, such as the amounts specified for consumers’ incomes and expenses.

Consumers with the lowest quality loans who had defaulted as of December 31, 2019, and haven’t had their cars repossessed, can keep their car and have any deficiency balance on the loan – up to $45 million in deficiency waivers nationwide – waived. Santander will also waive the deficiency balances for certain defaulted consumers across the country, with about $433 million in immediate forgiveness of loans still owned by Santander, and additional deficiency waivers of loans that Santander no longer owns but is required to attempt to buy back.

In addition, Santander has agreed to provisions to make changes to how it determines the terms of its loans. These provisions:

  • Require Santander to consider a consumer's ability to pay the loan on its specific terms.
  • Bar Santander from purchasing loans where consumers would likely have no money left over at the end of the month after accounting for monthly auto payments, housing costs, and other debt obligations.
  • Require Santander to compensate consumers who default within a certain number of months following origination, where circumstances indicate the loan was unaffordable at the time of origination.
  • Prohibit Santander from requiring dealers to sell add-on "back-end" products to consumers – such as service contracts and GAP insurance – which increase the risk of auto loans.
  • Mandate that Santander carry out other controls, such as updated assumptions for default housing payments, dealer monitoring, and consistent servicing practices.

If you believe that you’re eligible for relief under this settlement, you can check for updates about relief administration by visiting

States involved in the settlement are Arizona, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington, West Virginia, and Wyoming with the District of Columbia also participating.


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