The financing arm of Toyota has agreed to pay out up to $21,9 million to black and Asian borrowers who had to pay more for vehicle loans than Caucasians.
The announcement comes after an investigation from the Department of Justice and the federal Consumer Financial Protection Bureau into Toyota Motor Credit Corp. The report discovered that the automaker increased interest rates more for dark-skinned and Asian customers than it did for whites, but according to the investigation, stopped short of directly discriminating against minorities.
It was determined that on average, black borrowers were paying 0.27 per cent more on their loans compared to white borrowers with similar credit histories. By comparison, Asian borrowers forked out 0.18 per cent more.
The LA Times said that in response, Toyota Motor Credit will pay about $20 million in restitution to borrowers affected from January 2011 to February 9 2016. An additional $2 million is being set aside to compensate any new borrowers that may be impacted before controls are implemented to stop the overcharging.
Additionally, the company has reduced the maximum markup a dealer can apply to a loan from 2.5 per cent down to 1.25 per cent.