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Ally paying $98M to resolve US auto-loan claims
http://www.mysanantonio.com/news/article/Ally-paying-98M-to-resolve-US-auto-loan-claims-5081976.phpAlly paying $98M to resolve US auto-loan claims
By MARCY GORDON, AP Business Writer
December 20, 2013 : Updated: December 20, 2013 6:43pm
WASHINGTON (AP) — Ally Financial Inc. is paying $98 million to resolve U.S. government claims that minority borrowers were charged higher rates on its auto loans than whites with similar credit histories.
The agreement announced Friday by the Justice Department and the Consumer Financial Protection Bureau is the government's biggest auto-loan discrimination settlement to date.
Ally is paying $80 million in damages to about 235,000 African-American, Hispanic and Asian and Pacific Islander borrowers, and $18 million in penalties. The higher rates were charged on auto loans between April 2011 and December 2013, according to the government.
Detroit-based Ally is one of the largest indirect auto lenders in the U.S. Ally doesn't make auto loans directly to consumers; it buys the loan contracts made by auto dealers. Ally sets an interest rate for the loans and allows dealers to charge customers a higher rate, or dealer markup.