PLANO, Texas — Toyota Motor Credit Corp. announced it will raise dealer markup caps after earning early termination of three-year consent orders the captive finance company entered into with the federal Consumer Financial Protection Bureau and the U.S. Department of Justice in February 2016.
The finance source — better known to auto dealers and car buyers as Toyota Financial Services or “TFS” — made the announcement in a May 1 filing with the U.S. Securities and Exchange Commission. Directors stated, in part, that the captive “has satisfied the requirements for early termination of the consent orders … conditioned upon [TFS’s] completion of the distribution of the consumer restitution funds required by the consent orders.”
The termination will be made official upon court approval of a joint stipulation filed by TFS, the CFPB, and the DOJ. This step is expected to be completed “in the next few weeks,” according to the filing.
Officially filed in February 2016, the consent orders followed a three-year CFPB/DOJ investigation and forced Toyota Financial to become the third major auto finance source — along with Fifth Third Bank and American Honda Finance Corp. — to cap dealer markup at 1.25%. TFS plans to raise that limit to 2% for finance terms of up to 72 months and 1.5% for terms up to 84 months, according to Auto Finance News.
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