Santander agrees to $550 million settlement over subprime auto loans

Santander Consumer USA Holdings Inc said Tuesday it has agreed to a settlement with 33 states and the District of Columbia worth $550 million over subprime auto loans and to make changes to underwriting practices.

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 and to manage restitution claims. Santander said it was pleased to resolve the investigation and "no additional charges will be taken in connection with the settlement."