Writer: Lucy Lazarony
Editor: Adam West
Reviewer: Ashley Fricker
Key Takeaways
- Credit Acceptance will erase more than $630 million in auto loan debt for over 55,000 borrowers.
- The lawsuit alleged that unaffordable loans and costly add-ons caused many borrowers to lose their cars.
- The settlement provides $60 million for additional consumers who lost their cars and limits debt collection after certain repossessions.
A bipartisan coalition of 40 state attorneys general and the District of Columbia has secured roughly $700 million in relief and payments from Credit Acceptance Corporation (CAC), including more than $630 million in debt relief for consumers.
Credit Acceptance specializes in subprime auto loans for consumers with low or no credit scores.
“(Credit Acceptance Corporation) preyed on consumers in New York and across the nation with false promises of affordable loans.” — Letitia James, New York attorney general
“CAC preyed on consumers in New York and across the nation with false promises of affordable loans, only to exploit them with outrageous interest rates that ruined their credit and cost them their cars,” said New York Attorney General Letitia James. “While their customers struggled to make payments, CAC made millions.”
The Case Against Credit Acceptance Corporation
James and the Consumer Financial Protection Bureau (CFPB) sued Credit Acceptance in January 2023, alleging the lender pushed tens of thousands of consumers into unaffordable loans that included expensive add-on products.
These products allegedly cost consumers millions and caused many to lose their vehicles when they could no longer afford to make loan payments. Consumers allegedly were told the add-ons were required to obtain loans or were never told about the products.
The average loan from Credit Acceptance allegedly carried an annual interest rate of more than 38%, with some exceeding 100%.
James alleged the subprime auto lender hid the enormous cost of these loans from consumers, leading to high rates of delinquency or default and nearly half of all consumers having their vehicles repossessed during their loans.
The CFPB abandoned the case in April 2025, but the New York Office of the Attorney General continued the case, which has now been settled.
Details on the Settlement
Under a settlement with James and a bipartisan coalition of 39 other states and the District of Columbia, Credit Acceptance must adopt new lending and disclosure protections. The company did not admit wrongdoing.
Credit Acceptance must erase more than $630 million in outstanding debt for more than 55,000 consumers. It must also pay $60 million to additional consumers who lost their cars to repossession and more than $15 million in penalties to the states.
“By continuing our case to hold CAC accountable, we secured hundreds of millions of dollars in debt relief and restitution for all those who were taken advantage of by their schemes,” James said.
The settlement also requires changes to how Credit Acceptance handles debt after repossession and discloses add-on products.
If certain at-risk borrowers default on their car loans within 12 or 18 months and their vehicles are repossessed and sold, Credit Acceptance must forgive 95% of the resulting debt. It may collect the remaining 5%, but cannot sue to collect the debt or resell it.
To prevent consumers from paying for unwanted add-ons, Credit Acceptance must contact consumers outside the dealer showroom to clearly inform them of any add-on products they purchased. It must also offer consumers a process to cancel those products while keeping their vehicles.
