Toyota to Compensate Asian and Black Borrowers to Settle InvestigationCristina Cantor (Author) Published Date : Feb 03, 2016 18:30 IST
Toyota s financing arm is paying up to $21.9 million to Asian and black borrowers who paid more for their auto loans that did whites, settling the allegations by federal regulators of discrimination.
Toyota Motor Credit located in Torrance, California has been under investigation by the U.S. Justice Department and the Consumer Financial Protection Bureau for the past three years.
It was a target as part of a probe that was much broader into the practices of lending in the auto industry that has led to other settlements that are similar to other large auto credit businesses.
The agencies did not find that there was direct discrimination by Toyota Motor Credit, but instead that the dealerships of the automaker increased the interest rates for Asian and Black borrowers directly.
Lenders such as Toyota Motor Credit offer base rates for their buyers based on their credit worthiness.
Dealerships can add to the interest rate, which is known as the dealer markup.
Regulators did not take issue with the markups, but instead that the dealers added additional interest to the loans for Asian and Black borrowers.
Regulators were not taking the issue to the markups being made but rather that the dealerships had added interest to loans for Asian and black borrowers.
Eileen Decker, a U.S. Attorney, said that no consumer should have to pay more for any loan due to national origin or creed.
Investigators discovered that black borrowers were paying about 0.27 of a percentage point higher in comparison to whites. Asian borrowers paid more by about 0.18 percent.
The additional interest meant that the black and Asian buyers, on average were paying up to $200 more over the loan period.
Toyota agreed to play $20 million as restitution to its borrowers who had taken out a loan from January 2011 forward until Tuesday.
Toyota to Compensate Asian and Black Borrowers to Settle Investigation