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UPDATE:
- The administrator distributed electronic payments June 4, 2021, and checks on June 8, 2021.
- Payments may take 10 to 14 days to be received.
- More than 900 District of Columbia residents have begun receiving their payments, according to WUSA9.
- Consumers had until March 22, 2021, to select what type of payment to receive. If you did not receive a physical postcard regarding the settlement, you will not receive a check or e-payment.
- Consumers who did not receive an email regarding the settlement or received the email but did not follow the instructions for updating their address were not eligible to receive a payment.
Santander Bank has reached a $550 million dollar settlement with 33 states to settle predatory loan charges to low-income and subprime customers.
The settlement with Santander will resolve allegations that the bank violated consumer protection laws by putting subprime borrowers into loans that carried a high probability of default.
According to an article in The Wall Street Journal, the settlement will include $65 million that will go directly to consumers and $433 million which will go towards loan forgiveness, including funds for customers who have had their cars repossessed but still owe money to Santander.
According to the article, Santander has agreed to waive balances for customers who have low credit scores and who have stopped paying their loans at the end of last year.
In addition to paying $550 million, the bank has also agreed to factor the borrowers ability to repay loans into their underwriting.
A website has been opened up to let consumers know about the process for filing a claim in this matter.
“Santander profited by approving high-cost loans to disadvantaged auto buyers who were doomed from the start. These predatory loan practices have hurt countless families who are being hit hard by today’s economic climate,” California Attorney General Xavier Becerra said in a press release.
“This settlement should be a warning to the industry that we are committed to protecting consumers from abusive business practices.”
The Santander car loan website notes that the company knew that certain segments of the population were predicted to have a high likelihood of default.
The coalition of Attorneys General also claims that Santander’s aggressive pursuit of market share led it to underestimate risks associated with auto loans by “turning a blind eye” to dealer abuse.
In addition, the coalition alleges that Santander engaged in deceptive service practices and misled consumers about their rights and risks of partial payments as well as loan extensions.
According to the Santander car loan website, the $65 million settlement will be used for subprime consumers who have defaulted on loans between Jan. 1, 2010 and Dec. 31, 2019.
Santander is required to allow customers to keep their car and waive any loan balance for those who have the lowest quality loans and have defaulted as of Dec. 31, 2019.
Moving forward, Santander is not allowed to extend financing if a consumer has a negative residual income after taking into consideration monthly debt obligations.
Also, the company has agreed to test all loans that default in the future to see if the customer had negative income, according to the Santander car loan site.
“Santander is barred from requiring dealers to sell ancillary products, such as vehicle service contracts Santander will also implement steps to monitor dealers who engage in income inflation, expense inflation, power booking, and Santander will enact additional documentation requirements for those dealers,” according to the Santander car loan website.
Under the terms of the settlement, the company will attempt to buy back the loans that it sold and if they do so successfully, they will provide additional deficiency wavers, the Santander auto website adds.
According to an article in the Baltimore Business Journal, more than 9,000 Maryland citizens will be eligible to receive restitution payments, adding up to a total of up to $2.2 million dollars. In addition, more than 1,000 Maryland citizens will be receiving deficiency waivers, which totals $13.7 million.
According to the settlement website, the Attorney General of Illinois led the coalition in opening the investigation into Santander’s practices starting in March 2015 after receiving numerous complaints from consumers related to their subprime loans.
The states that are involved in the Santander auto settlement include: Maryland, New Jersey, Pennsylvania, Illinois, California, Oregon, Washington, Arizona, Arkansas, Connecticut, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Nebraska, New Hampshire, New Mexico, New York, North Carolina, Rhode Island, South Carolina, Tennessee, Utah, Virginia, West Virginia and Wyoming, along with the District of Columbia.
This is not the first time that Santander has been the subject of probes into their lending practices. BankingDive notes that the Federal Reserve issued an order in 2017 which required Santander to improve its risk management services. In addition, in 2017 Santander agreed to pay $25.9 million to resolve claims in Massachusetts and Delaware related to subprime auto loans.
Also, according to the article, Santander also tracked dealers that submitted risky loans or falsified applications but did not cut ties with them if the loans were profitable.
Providing context for the Santander loan issue, Investopedia explains that subprime auto loans are a type of loan that is used to finance the purchase of a car. They are reportedly offered to people who do not have much credit history, or people who have low credit scores. Subprime loans have risks involved, but can be the only option for many people.
Those who must take out a subprime loans may have to contend with high interest rates, and repayment penalties if they try to pay off the loan early to avoid interest payments. This kind of loan gained in popularity as a result of the monetary expansion of 2001 and 2004. Subprime loans came along with similar forms of lending like subprime mortgages.
According to Investopedia, subprime lenders began to be more common because lenders felt more comfortable taking on higher-risk loans when they had more money due to monetary expansion.
Philadelphia Business Journal explains that Santander is considered one of the largest subprime auto lenders in the United States. Reportedly, around 82 percent of auto loans provided by the company are characterized as subprime. This information came from the office of New Jersey Attorney General Gurbir S. Grewal, who noted that about half of the borrowers of Santander car loans defaulted between 2013 and 2015.
Did you receive a subprime auto loan from Santander? Leave a message in the comments section below.
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2,253 thoughts on$550M Santander Car Loan Settlement Reached
I’m still paying on my loan I don’t know if I should stop I live in Wisconsin and it’s more than half my income I did not know about the interest rate I bought the car and I had it praised and it’s only worth 1500 and I can’t trade it in and they won’t let me refinance the car and I live on a fixed income I need the car what time it’s hard to find somebody to sell you a car and my payment is 575 a month and that’s the majority of my income that’s what I was wondering should I stop but hear from you guys or still keep on paying it all best I can
I bought a 2017 Yaris Ia through Santandar, the interest rate was high but I was rebuilding my credit so I accepted it. I honestly had a good experience with them, I almost died during COVID and they helped me through that. I paid my car off early and decided I wanted a new car and wanted to work with Santandar again since my experience was good. I purchased a new 2022 Dodge Challenger and I was ticked that they were charging me 2 different % rates after prooving to them that I was a good customer. Then I found out why. I’m currently looking for a lawyer to help me file a lawsuit as I was not given a chance or notification that Santandar/Chrysler thinks it’s ok to take their customers over the coals (especially returning customers). Any help would be greatly appreciated.
Had car loan financed by Santander 2012 with interest rate of 13.8 ,don’t know yet how much I was ripped off
Will se original paper at Chevrolet dealer , buying Golf GT back to 2012.
We bought a 2017 GMC Terrain and financed it through Santander in August of 2019. The loan is now more than what we financed it for and Santander will not work with us to remedy the issue. We need help.
I was sold 2015 Jeep Cherokee by this dealer with a Chrysler Finance on a Santander Banking. I had an upside down rate. The purchase price on this car was $35,000 and my credit score was not good and I didn’t know anything about the upside down rate. Now it’s 2023 and I pay $723 per month on my loan and my loan balance is $27,000 does this make any sense? I need help.
I bought a chevy Impala in 2014 with Santander as the lender. Initially i was told i could not get the loan of $15K because my credit was bad and it would require a large down payment. 2-3 days later i got a call saying that i got the car with no down payment and Santander was the lender. Price dropped down to $13K. Almost 9 years later i still owed almost $4500. The car was repossessed in April 2023 because i couldn’t keep up with the payments. It is impacting my credit horribly and they keep calling requesting payment for the $3K remaining balance. They already sold the car and got $1500 for it.
Financed 49,500 dollars on a 2023 Toyota Tundra TRD with a credit score of 700. Payments should be around 6 to 800 per month. Santander went above the 25% APR max it seems for the state of Michigan, leaving a monthly payment of 1,400 dollars per month for 72 months. 100,800 dollars total.
Asked the customer service representative what the APR is on the loan. She could not find the information. I told her it was over 25% and she hung up on me.
I bought a 2022 kia Forte. I got behind on my payments by a month. I was going pay current on payday 2 days before payday they repossessed my car said I was 200 days late and closed my loan. They refuse give me my personal items out of car and everything.
I have a 2011 car being paying on $18,000 loan for seven years and still owe $10,000. Please sent help I’m in St Louis Mo
I was a customer of Santander, The car that I got a car loan for was a 2015 Mustang GT Premium with 4100 miles and the dealer included a 5yr. 50,000 mile warranty on the car for an additional of $3000, but didn’t indicate that the car had a 3yr. 36,000 mile warranty from the manufacturer to give me a chance to decide on whether I needed or wanted a warranty or not, so that addition created a higher than necessary cost to the loan and including that amount created an interest as well costing in total an additional $6000 total to the cost of the loan and being unaware of the additional charge just makes you pay more for the loan, but in addition the created my loan based on affordability due to the income establishment, meaning they see what you can afford according to your income and make the payment according to how much you earn rather than what should be offered, but using a low credit score to justify a high payment, but not based all on your credit score alone, but saying in other word Ok, since you can afford a high payment we will give it to you with higher than necessary interest, so we can profit more than necessary money. My credit score at the time in April 2016 was 585 should I had been approved for a $882 with 72 monthly payment and I only needed a $1000 Dn. roughly the $82 was the additional amount the unnecessary cost for a warranty I didn’t have a chance to decide on and the car already had a warranty. After all of that the car was in a total loss accident the insurance company paid all but the the GAP difference so I had a balance, but also had GAP, but the GAP insurance didn’t payout because of a clause I wasn’t aware by
Santander the Dealer not the GAP insurance that says if deferred payments are unpaid or behind at the time of an accident due to total loss it won’t pay the remaining balance, so that amount, the difference was applied to my credit. The legitimate reason for the deferments was because I was injured working and the short term disability payment were being late and sometimes for a few months without payment, so I had to defer to keep transportation to and from the doctors and eventually became totally disabled, but anyway not knowing about the deferment clause and never being told from neither party that had a chance to inform me. Lastly I’m trying to gather if my loan was subprime and I was a subprime customer during the time of the lawsuit 2010 to 2019 being that my car loan was in North Carolina between April 2016 and December 2018, I wasn’t apart of the phone calls notifications of emails about the the lawsuit. Well the car was total loss on December 28, 2018 and the insurance company paid $22,000 towards the value of the remaining loan, GAP didn’t pay the difference, but on a loan with a lender that was in a lawsuit I wasn’t notified of and the balance of that loan is on my credit is there anything that could be done about this situation.