States Secure $700 Million Settlement With Credit Acceptance Corporation
New York Attorney General Letitia James and a coalition of 39 other states and the District of Columbia have reached a $700 million settlement with Credit Acceptance Corporation, resolving allegations involving the subprime auto lender’s loan practices.
The settlement includes more than $630 million in debt relief for over 55,000 consumers nationwide, along with $60 million in restitution for consumers whose vehicles were repossessed. Credit Acceptance Corporation will also pay $15.5 million in penalties to participating states. Approximately 2,500 New York consumers are expected to receive relief, with the state receiving about $34 million through debt relief, restitution, and penalty payments.
The agreement also requires Credit Acceptance Corporation to make changes to its lending and collection practices, including new requirements involving certain repossessed vehicles and optional products sold alongside auto loans.
Lawsuit Followed Multiyear Investigation
James and the Consumer Financial Protection Bureau filed suit against Credit Acceptance Corporation in January 2023 following a multiyear investigation by the New York Office of the Attorney General.
The lawsuit alleged that the company placed consumers with low credit scores or limited credit histories into loans that were unaffordable and carried unusually high interest rates. According to the New York Attorney General’s Office, the average loan involved in the investigation carried an annual interest rate above 38 percent, while some exceeded 100 percent.
State officials also alleged that many consumers experienced delinquency or default and that nearly half had their vehicles repossessed during the life of their loans.
The complaint further alleged that Credit Acceptance Corporation structured its relationships with dealers in ways designed to protect its expected returns, including projections tied to consumer payments, repossession proceeds, auctions, and wage garnishment.
Allegations Included Add-On Products
The investigation also examined optional products and insurance sold in connection with Credit Acceptance Corporation loans.
According to the Attorney General’s Office, some consumers were allegedly told that add-on products were required to obtain financing, while others were not clearly informed that the products had been included.
Officials alleged that Credit Acceptance Corporation was aware of those practices and failed to adequately address them. The lawsuit also claimed that loans were packaged and sold as securities while being represented as legally compliant.
The allegations were resolved through the settlement and accompanying consent order.
CFPB Withdrew From the Case
The CFPB withdrew from the litigation in April 2025. The New York Attorney General’s Office continued pursuing the case alongside participating states.
That litigation ultimately resulted in the multistate settlement announced September 17, 2026.
Under the agreement, Credit Acceptance Corporation will eliminate more than $630 million in outstanding debt owed by more than 55,000 consumers. An additional $60 million will be distributed as restitution to certain consumers who lost their vehicles through repossession shortly after obtaining their loans.
Settlement Adds New Consumer Protections
Beyond the financial relief, the agreement establishes requirements governing how Credit Acceptance Corporation handles certain accounts after repossession.
For qualifying borrowers who default within specified 12- or 18-month periods and whose vehicles are repossessed and sold, the company must forgive 95 percent of the remaining debt. The company may seek to collect the remaining five percent, but it cannot bring a collection lawsuit against the borrower or sell or transfer the contract.
The company must also contact consumers outside the dealership environment to provide clearer information about certain add-on products connected to their loans. Consumers must be given a process to cancel qualifying products while keeping their vehicles.
Multistate Agreement Expands Impact
The settlement includes attorneys general from states across the country, as well as the District of Columbia and Hawaii’s Office of Consumer Protection.
For the auto finance and receivables industries, the agreement highlights continued regulatory scrutiny around affordability, disclosures, add-on products, repossession practices, and post-default account treatment. The settlement also illustrates how state enforcement actions can continue independently even when a federal agency withdraws from litigation.
The resulting requirements extend beyond monetary relief, placing long-term operational obligations on Credit Acceptance Corporation that could influence how similar subprime auto lending practices are evaluated by regulators going forward.
