Car manufacturer Volkswagen has agreed to pay about $10.2 bn6.8bn; €8.7bn) to settle claims filed in the US over an emissions-cheating scandal. An unnamed source told Associated Press news agency that the money will be used to compensate 482,000 owners of cars that contain 2-litre diesel engines programmed to cheat on emissions tests.

Volkswagen admitted in September 2015 that it had circumvented US environmental tests by using software to mask nitrogen oxide emissions that can cause or exacerbate respiratory disease.

The source, who spoke to Associated Press on conditions of anonymity as the judge had issued a gag order in the case, said the terms of the agreement might change by the time the court makes them public on Tuesday (28 June).

The source added owners would get between $1,000 and $7,000 in compensation, depending on their cars' age.

Following the scandal, VW saw its first-quarter profit plunge by almost a fifth. The German company recently rejected a demand from the EU's industry commissioner to launch a compensation scheme for car owners in Europe affected by the emissions scandal.

Volkswagen is to buy back up to 500,000 2.0-litre diesel vehicles sold in the US with excessive emissions Getty Images