Exeter Finance LLC has been hit with a $5.5 million penalty from state Attorney General Maura Healey’s Office for alleged unfair, subprime auto loans for local car buyers.

Of the penalty, $4.675 million will be available to provide relief to harmed borrowers and $825,000 will be a payment to the state. Exeter will also waive deficiencies on certain subprime loans and will ask the major credit bureaus to wipe all trade lines for involved subprime loans on consumers’ credit reports, according to Healey’s office.

“This company’s loans put Massachusetts car buyers in economic danger,” Healey said in a statement Monday. “Today’s settlement with Exeter provides millions of dollars in relief and repairs damaged credit. Our office will continue to investigate the subprime lenders, financiers and securitizers, and protect consumers.”

The AG’s Office alleged Exeter facilitated the origination of Massachusetts auto loans that the company knew or should have known were unfair and in violation of state consumer protection law. Courts have held that lending is unlawful under the statute if lenders do not have a basis for believing that borrowers will be able to repay their loans in normal course. Exeter also allegedly mishandled servicing and collecting activities in violation of state debt collection regulations.

The investigation was done in collaboration with the Delaware Attorney General’s Office, which also entered into a settlement with Exeter Monday.