Key facts
- Credit Acceptance agreed to a $710 million settlement with 40 U.S. states and Washington D.C.
- The settlement resolves charges of predatory auto lending and pushing unnecessary add-on products.
- Credit Acceptance will forgive $634 million of debt for over 55,000 borrowers.
- The company will pay $60 million in restitution and a $15.5 million penalty.
- New lending practices include warning borrowers of high default risk and waiving 95% of debt upon default.
- The settlement resolves a lawsuit filed by New York Attorney General Letitia James and the CFPB.
Credit Acceptance Corp., a large subprime auto lender, has agreed to a $710 million settlement with 40 U.S. states and Washington D.C. to resolve allegations of predatory lending practices. The company is accused of pushing low-income borrowers with poor credit into loans they could not afford, often including unnecessary add-on products like service contracts and insurance.
According to the states, many borrowers defaulted on these loans or had their vehicles repossessed. As part of the settlement, Credit Acceptance will forgive $634 million in debt for more than 55,000 borrowers who took out loans between November 2015 and November 2025. Additionally, the company will pay $60 million in restitution to thousands of other borrowers and a $15.5 million penalty, as stated by New York Attorney General Letitia James.
The company has also committed to changing its lending practices. These changes include providing advance warnings to borrowers when their loans carry a historically high risk of default, waiving 95% of sums owed if such borrowers default within 12 or 18 months, and refraining from suing to collect the debt or selling it to third parties. Credit Acceptance denied wrongdoing in agreeing to the settlement.
The settlement also resolves a lawsuit filed in January 2023 by James and the U.S. Consumer Financial Protection Bureau (CFPB). The CFPB withdrew from that case in April 2025, citing principles of justice and fairness, amid a reported curtailment of its enforcement activity during U.S. President Donald Trump's second White House term. Credit Acceptance shares were down 2.7% in afternoon trading.