August 29, 2016 10:41 AM ET

Consumer Finance

Company Overview of Toyota Motor Credit Corporation

Company Overview

Toyota Motor Credit Corporation provides various financial and insurance products to authorized Toyota, Scion, and Lexus vehicle dealers or dealer groups, and other domestic and import franchise dealers and their customers in the United States and Puerto Rico. The company acquires retail installment sales contracts; and leasing contracts accounted for as either operating leases or direct finance leases from dealers. It also provides dealer financing, including wholesale financing, working capital loans, revolving lines of credit, and real estate financing to dealers and various multi-franchise organizations. In addition, the company offers vehicle service agreements, guaranteed auto protecti...

19001 South Western Avenue

Torrance, CA 90501

United States

Founded in 1982

3,140 Employees

Phone:

310-468-1310

Key Executives for Toyota Motor Credit Corporation

Chief Executive Officer, President and Director
Age: 61
Chief Financial Officer, Senior Vice President and Director
Age: 59
President of Toyota Motor Corporation and Director of Toyota Motor Corporation
Age: 60
Chief Administrative Officer, Senior Vice President, Secretary and Member of Executive Committee
Age: 68
Principal Accounting Officer and Vice President of Accounting & Tax
Age: 58
Compensation as of Fiscal Year 2016.

Toyota Motor Credit Corporation Key Developments

Toyota Motor Credit Corporation Settles Bias Claims

Toyota Motor Credit Corp. will pay as much as $21.9 million to black and Asian borrowers who paid more for auto loans than whites, settling allegations of discrimination by federal regulators. Toyota Motor Credit Corp. in Torrance had been under investigation by the Department of Justice and the federal Consumer Financial Protection Bureau since 2013. It had been targeted as part of a broad inquiry into auto lending practices that has led to similar settlements with other major auto credit companies. The agencies didn't find that Toyota Motor Credit discriminated directly, but rather that the automaker's dealerships increased interest rates more for black and Asian borrowers than for whites. Lenders such as Toyota Motor Credit offer a base rate for buyers based on their credit-worthiness. Dealerships then are allowed to tack on additional interest -- known as a dealer markup. Regulators didn't take issue with the markups themselves, but rather that dealerships added extra interest to loans for black and Asian borrowers. 'No consumer should be forced to pay more money for a loan because of their race or national origin,' U.S. Atty. Eileen M. Decker of the Central District of California said in a statement announcing the settlement. Investigators found black borrowers paid 0.27% more for loans than whites with similar loans and credit histories. Asian borrowers paid 0.18% more. The extra interest meant black borrowers, on average, paid as much as $200 extra over the course of their loans, while Asians paid $100 extra. It's not clear how many borrowers were affected, but the settlement's size implies more than 100,000 borrowers. In a complaint filed in Los Angeles federal court, the Justice Department said Toyota knew that allowing dealerships to mark up loans created a 'substantial risk of discrimination', but Toyota did not start monitoring markup disparities until 2014 -- the year after federal regulators started their investigation. Toyota Motor Credit has agreed to pay about $20 million in restitution to borrowers who took out loans from January 2011 to February 2, 2016. The company also will set aside $2 million to compensate new borrowers until Toyota puts controls in place to prevent overcharging.

Toyota Motor Credit Corp. Reaches Agreement with CFPB, DOJ over Discretionary Dealer Compensation Practices

On February 2, Toyota Motor Credit Corp. announced a settlement with the Consumer Financial Protection Bureau and the Department of Justice that addresses discretionary dealer compensation practices. According to a consent order filed on the same day, the CFPB said Toyota Motor Credit violated the Equal Credit Opportunity Act and its implementing regulation by permitting dealers to charge higher interest rates to consumer auto loan borrowers on the basis of race and national origin. The DOJ has alleged the same violations in a civil action filed in the U.S. District Court for the Central District of California. Toyota Motor Credit sets interest rates for consumers based on credit scores and other risk criteria. The rates are conveyed to auto dealers. Toyota Motor Credit then allows auto dealers to charge a higher interest rate when they finalize the deal with the consumer, called dealer markup, which gives dealers the discretion to charge consumers different rates regardless of creditworthiness. The CFPB said over the time period under review, Toyota Motor Credit permitted dealers to mark up consumers' interest rates as much as 2.5%. The investigation concluded that Toyota Motor Credit's pricing and compensation structure meant that for the period covered in the order, thousands of African-American borrowers were charged, on average, $200 more for their auto loans, and thousands of Asian and Pacific Islander borrowers were charged, on average, $100 more for their auto loans. The investigation did not find that Toyota Motor Credit intentionally discriminated against its customers, but rather that its discretionary pricing and compensation policies resulted in discriminatory outcomes. Toyota Motor Credit denied any wrongdoing and agreed to change its pricing and compensation system to substantially reduce dealer discretion and accompanying financial incentives to mark up interest rates. Toyota Motor Credit is also required to pay up to $21.9 million in restitution to thousands of African-American and Asian and Pacific Islander borrowers who paid higher interest rates for their auto loans, without regard to their creditworthiness. Toyota Motor Credit agreed to reduce dealer discretion to mark up the interest rate to only 1.25% above the buy rate for auto loans with terms of 5 years or less, and 1% for auto loans with longer terms. Toyota Motor Credit also has the option under the order to move to non-discretionary dealer compensation. Toyota Motor Credit will pay to hire a settlement administrator to distribute funds to affected consumers.

Toyota Motor Credit Reaches Agreement with Consumer Financial Protection Bureau and the Department of Justice over Discretionary Dealer Compensation Practices

Toyota Motor Credit Corp. on Feb. 2 announced a settlement with the Consumer Financial Protection Bureau (CFPB) and the Department of Justice that addresses discretionary dealer compensation practices. According to a consent order filed on the same day, the CFPB said Toyota Motor Credit violated the Equal Credit Opportunity Act and its implementing regulation by permitting dealers to charge higher interest rates to consumer auto loan borrowers on the basis of race and national origin. The DOJ has alleged the same violations in a civil action filed in the U.S. District Court for the Central District of California, according to the consent order. Toyota Motor Credit sets interest rates for consumers based on credit scores and other risk criteria. The rates are conveyed to auto dealers. Toyota Motor Credit then allows auto dealers to charge a higher interest rate when they finalize the deal with the consumer, called "dealer markup," which gives dealers the discretion to charge consumers different rates regardless of creditworthiness. The CFPB said over the time period under review, Toyota Motor Credit permitted dealers to mark up consumers' interest rates as much as 2.5%. The investigation concluded that Toyota Motor Credit's pricing and compensation structure meant that for the period covered in the order, thousands of African-American borrowers were charged, on average, $200 more for their auto loans, and thousands of Asian and Pacific Islander borrowers were charged, on average, $100 more for their auto loans. The investigation did not find that Toyota Motor Credit intentionally discriminated against its customers, but rather that its discretionary pricing and compensation policies resulted in discriminatory outcomes. Toyota Motor Credit denied any wrongdoing and agreed to change its pricing and compensation system to substantially reduce dealer discretion and accompanying financial incentives to mark up interest rates. Toyota Motor Credit is also required to pay up to $21.9 million in restitution to thousands of African-American and Asian and Pacific Islander borrowers who paid higher interest rates for their auto loans, without regard to their creditworthiness. Toyota Motor Credit agreed to reduce dealer discretion to mark up the interest rate to only 1.25% above the buy rate for auto loans with terms of 5 years or less, and 1% for auto loans with longer terms. Toyota Motor Credit also has the option under the order to move to non-discretionary dealer compensation. Toyota Motor Credit will pay to hire a settlement administrator to distribute funds to affected consumers.

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