"Santander auto-loan unit to pay back $5.4m" by Deirdre Fernandes Globe Staff November 05, 2015
The subprime auto-loan business of Santander Holdings USA Inc. has agreed to provide $5.4 million in financial relief to several hundred Massachusetts consumers, primarily in lower-income communities, for charging them higher than allowed interest rates.
Under the settlement, announced Thursday, the lender will eliminate interest charges on the remaining balances of the loans of 450 customers and reimburse them for interest payments they made. The average relief to these consumers, many of them in Boston, Worcester, Springfield, Pittsfield, and Lowell, will be $11,000, according to Attorney General Maura Healey.
“Consumers need to know that when they take out a loan, they will be treated fairly,” Healey said in a statement. “It is important that protections under state law are properly applied, especially when it comes to economically disadvantaged consumers in Massachusetts.”
Santander Holdings USA, the US subsidiary of the Spanish financial services giant Banco Santander SA, is headquartered in Boston. Its subprime auto-loan business, which lends to borrowers with poor credit histories, is called Santander Consumer USA Holdings Inc.
It's all a $hell game.
Santander Consumer discovered that some of its Massachusetts auto loans had interest rates above the state cap of 21 percent during a self-audit earlier this year and notified Healey’s office, the company said in a statement. Under the agreement, Santander admitted no wrongdoing.
Most of the loans at issue were made this year. Santander said it changed its systems to ensure that Massachusetts loans don’t exceed the limits.
“We are committed to treating our customers fairly and ensuring we comply with the law,” the company said. “We did not live up to our standards in this instance.”
Santander's subprime auto-loan business has come under state and federal regulatory scrutiny in recent years over concerns about possibly discriminatory lending practices and the granting of loans with high interest rates to borrowers who may not be able to repay them, as occurred in the run-up to last decade’s housing crisis....
Another bubble ready to pop and needing a bailout?
Good thing we got Geico!