LOS ANGELES (CN) - Toyota agreed to limit dealer markups on auto loans to settle claims it discriminated against minority borrowers, the Justice Department said Tuesday.
Investigations into Toyota Motor Credit's lending practices by the Justice Department and the Consumer Financial Protection Bureau found that the lender discriminated against qualified black and Asian borrowers by charging them more in dealer markups than qualified white borrowers.
The government estimates the average qualified black borrower paid over $200 more than similar white borrowers over the term of the auto loan, because Toyota charged them higher interest rates. The average Asian borrower paid over $100 more for the same reason, the Justice Department said.
Toyota will fork out $19.9 million to repay affected borrowers who took out loans between January 2011 and January 2016, and another $2 million to borrowers who will be affected until the automaker's new policies are rolled out later this year.
Additionally, Toyota agreed to limit dealer markups to 1.25 percent for loans less than 60 months and 1 percent for longer loans, the Justice Department said.
Toyota's settlement comes on the heels of a similar investigation and settlement into Honda's lending practices this past year.
In that case, Honda agreed to pay $24 million to qualified black, Hispanic and Asian borrowers who paid higher dealer markups than their white counterparts.
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