Credit Acceptance Reaches $710 Million Settlement Over Predatory Lending Allegations

Credit Acceptance Corp. has agreed to a $710 million settlement with 40 U.S. states and the District of Columbia to resolve allegations that the company engaged in predatory auto lending practices. The agreement addresses charges that the subprime lender knowingly trapped borrowers with low incomes and poor credit into loans they could not afford.

Settlement Details

According to the announcement on Thursday by New York Attorney General Letitia James, the settlement requires Credit Acceptance to provide significant financial relief and reform its business practices. While the company denied wrongdoing in the agreement, its key terms include:

• $634 million in debt forgiveness for more than 55,000 borrowers with loans originated between November 2015 and November 2025.
• $60 million in restitution payments to thousands of other affected borrowers.
• A $15.5 million civil penalty.

The Southfield, Michigan-based company also agreed to cap interest rates and warn borrowers if their loans carry a high historical risk of default. It will also waive 95% of the outstanding balance for certain high-risk borrowers who default within 18 months and will be prohibited from suing or selling that debt.

Predatory Lending Allegations

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The states claimed that Credit Acceptance pushed borrowers into unsustainable loans and facilitated the sale of unnecessary add-on products, such as vehicle service contracts. This often led to vehicle repossessions and damaged consumer credit.

"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," James said in a statement. Court documents cited an example where a mother earning $950 per month was given a loan with a $260 monthly payment, which ultimately resulted in her vehicle being repossessed twice.

Market Impact and Context

Following the news, shares of Credit Acceptance (CACC) were trading down 2.7% at $585.08 in afternoon trading. The settlement also resolves a lawsuit filed in January 2023 by the New York Attorney General and the U.S. Consumer Financial Protection Bureau (CFPB).

The CFPB withdrew from that lawsuit in April 2025, a move the source article noted was consistent with a broader curtailment of enforcement activity during the period. Credit Acceptance did not immediately respond to requests for comment on the settlement.