WASHINGTON — Santander Consumer USA Holdings Inc. said on Tuesday it had agreed to make changes to its underwriting practices as part of a $550 million settlement with 33 states and the District of Columbia over subprime auto loans.
The states said Santander violated consumer protection laws by placing borrowers with subprime credit into auto loans it knew carried a high probability of default. Santander has agreed to pay $65 million for restitution for some customers and to waive deficiency balances on loans worth $478 million. It will also pay $7 million to the states to manage restitution claims.
Santander, the nation’s largest subprime auto financing company and an arm of Spanish bank Banco Santander SA that went public in 2014, said it was pleased to resolve the investigation and “no additional charges will be taken in connection with the settlement.”
“Santander profited by approving high-cost loans to disadvantaged auto buyers who were doomed from the start,” said…