Credit Acceptance agrees to million settlement over unaffordable subprime car loans

Credit Acceptance Corporation, one of the largest auto finance companies in the country, has agreed to provide $694 million in cash and debt relief to borrowers under a settlement with a coalition of state attorneys general. The states allege the company made car loans that it knew or should have known borrowers could not afford, and that it let dealers load unwanted add-on products onto loan contracts.

Colorado Attorney General Phil Weiser announced the deal on Sept. 17, saying Colorado had joined 40 other states in the agreement, according to Colorado’s announcement. The settlement takes effect Nov. 2, 2026.

What the states allege

Credit Acceptance provides car loans to consumers with limited or impaired credit histories. The company gives each loan a proprietary score that represents its prediction of the percentage of the loan it will collect from all sources, the Colorado release says.

The attorneys general allege that consumers could not reasonably afford many of the loans with low scores, including loans where the company predicted the borrower would not repay even the original loan amount. Many of those loans ended in default. The release says borrowers then lost their cars when the vehicles were repossessed and sold at auction.

The states also allege that Credit Acceptance encouraged, and failed to reasonably prevent, the unlawful “packing” of vehicle service contracts and guaranteed asset protection products by dealers in its network. According to the release, the company’s dealer compensation methodology and its lack of reasonable dealer oversight led dealers to sell those products aggressively. In some cases, the allegations say, consumers were unaware they were buying them or were led to believe they had to buy them to get financing.

“Buying a new vehicle is stressful enough without having to deal with the kind of predatory practices we allege in the CAC case,” Weiser said in the release.

Money borrowers will receive

The settlement provides $60 million in cash restitution for consumers to whom Credit Acceptance gave particularly risky loans. For certain risky loans made between Nov. 1, 2015, and Nov. 30, 2025, the company must also provide debt relief by Nov. 2, 2026. That relief totals $388 million for borrowers whose cars were repossessed and $246 million for borrowers whose cars were not repossessed, which allows them to keep their vehicles. Credit Acceptance must also pay an additional $15 million to the attorneys general.

In Colorado, nearly 500 consumers will receive $678,736 in restitution, and the state will receive a $186,455 cash payment. Customers eligible for debt relief will be notified by Credit Acceptance, and consumers eligible for restitution will be notified by a claims administrator.

Changes to how the company lends

The consent judgment also sets requirements for the company’s lending practices going forward. The Colorado release lists these terms:

• For certain risky loans made starting in December 2025, Credit Acceptance must offer “off ramps” for loans that fail quickly. Qualifying consumers get 95% debt relief, and the company is prohibited from filing collections lawsuits against them. The off ramps must be provided for five years starting Nov. 2, 2026.
• The company must follow a process to prevent unlawful packing of service contracts and asset protection products. The process includes enhanced pre-purchase disclosures, a post-purchase notice to consumers, easier cancellation of the products and dealer monitoring.
• Credit Acceptance must give consumers pre-loan disclosures about the risks of default and the value of the vehicle.
• For seven years, the company must cap vehicle prices at 109% of retail book value for certain consumers.
• The company must put processes in place to prevent dealers from raising car prices because of a borrower’s creditworthiness or above advertised prices.

Who joined

The attorneys general of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington and Wisconsin joined the settlement, according to the Colorado release.

The Colorado attorney general’s office has posted the complaint and the consent judgment as PDFs alongside its announcement. Consumers who think they may qualify are to be contacted directly, by the company for debt relief and by a claims administrator for restitution.