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Toyota Motor Credit Pays $21.9 Million in Settlement Over Discriminatory Auto Lending Practices

Wednesday, February 3, 2016

In the first week of this year’s Black History Month, the Consumer Financial Protection Bureau (CFPB) announced that it has reached a settlement with Toyota Motor Credit, which will result in the finance company paying up to $21.9 million in restitution to affected borrowers. Toyota Motor Credit’s past practices resulted in thousands of borrowers of color paying higher interest rates than white borrowers. The company will also change its lending practices to reduce discrimination, and submit to additional oversight to monitor for potential future discriminatory impact.

CRL Executive Vice President Chris Kukla released the following statement:

The terms of the settlement continue to move in the right direction. However, dealer discretion to mark up interest rates remains an unfair and hidden practice with continued potential for discrimination. The only effective way to completely eliminate the discriminatory impact and the unfairness of hidden dealer interest rate markups is to end the practice altogether.

Law enforcement must continue to vigilantly and swiftly act when they uncover discriminatory or unfair lending as they have done with other enforcement actions. The recent news that Ally paid an additional $38 million in restitution to compensate borrowers harmed after Ally’s settlement with the Consumer Financial Protection Bureau and the Department of Justice shows that the issue of discrimination due to car dealer interest rate markup is real and needs to end.

For more information, or to arrange an interview with a CRL expert on auto lending, please contact Charlene Crowell at or 919.313.8523

How dealer interest rate markups work in practice: A lender approves a 5% interest rate loan for a consumer, but allows the dealer to add additional interest. The dealer adds 2%, tells the consumer she qualified for a loan at 7% and pockets most of the difference. The consumer never knows she qualified for a lower rate. Borrowers of color see their loans marked up more often and by a greater percentage than their white counterparts, even when credit scores and other variables are comparable.