Santander Paying $26M in Settlement of Subprime Auto Loans Case

Santander will pay a $26 million settlement after allegations it provided unfair, high-interest auto loans that in many cases were predicted to default, Attorney General Maura Healy announced Wednesday.

Healy said Santander knew it was making bad loans that would not be able to be payed back, even predicting default in many cases. She said Santander identified "fraud dealers" who reported inflated incomes on loans and continued to fund loans through those dealers. Santander would then securitize the loans and sell them for profit.

"Deceptive, predatory lending impacts people's ability to get and maintain jobs and ultimately depresses our economy," Healy tweeted.

The settlement, filed in Suffolk Superior Court, includes $16 million to 2,000 consumers in Massachusetts and $6 million to the state. Another $4 million will go to Delaware, where the AG's office helped Healy's in the investigation.

The settlement aims to help loan consumers in Massachusetts pay the loans and avoid defaults.

Santander will implement new subprime loan oversight policies, Healy said.

A 2005 Wall Street Journal article reported Santander auto loans had the highest delinquency rates among banks.

Consumers with questions can call the AG's hotline at 1-888-830-6277.

Photo courtesy of AG's office