AG Grewal Announces Settlement with Santander in Multi-state Investigation of Allegedly Predatory Subprime Auto Lending Practices
New Jersey and NJ Residents Will Receive Over $3 Million, in Addition to Loan Forgiveness, and Company Will Change Allegedly Predatory Lending
TRENTON – Attorney General Gurbir S. Grewal announced today that Santander Consumer USA Inc. will pay the State of New Jersey approximately $589,142, provide New Jersey consumers $2.5 million in restitution, forgive the loans of more consumers, and modify its business practices as part of a settlement that resolves a multi-state investigation into Santander’s allegedly predatory auto lending practices.
Santander is one of the largest subprime auto lenders in the United States. Subprime auto lending targets higher-risk borrowers. The loans typically involve high interest rates and prolonged repayment plans, both of which increase the likelihood of borrower default. About 82 percent of Santander’s retail auto loans are considered subprime, and between 2013 and 2015, roughly half of Santander’s subprime auto loan borrowers defaulted.
New Jersey was part of the Executive Committee spearheading the investigation of allegations that Santander typically failed to require proof of income when considering loan applications; failed to conduct meaningful oversight of conduct by auto dealers, increasing the number of loans founded on false information; and often extended loans that were unaffordable over the life of the loan. Illinois served as the lead state, with California, Maryland, Oregon and Washington rounding out the Executive Committee.