Credit Acceptance Corp. Agrees to $710 Million Predatory Lending Settlement

A coalition of 41 U.S. states and Washington, D.C., reached a settlement with Credit Acceptance Corp. to resolve allegations that the subprime auto lender targeted low-income borrowers with predatory loans designed to fail. While some reports cite the total at $694 million, the comprehensive agreement totals approximately $710 million, including $634 million in debt forgiveness for over 55,000 borrowers, $60 million in cash restitution, and a $15.5 million penalty paid to participating states.

Regulators alleged the company originated loans it knew were unaffordable, noting that 70% of borrowers defaulted within three years. The company was further accused of allowing dealers to pack contracts with unnecessary add-on products and insurance. As part of the settlement, Credit Acceptance will erase $388 million in balances for repossessed vehicles and provide $246 million in relief for current borrowers for loans issued between November 2015 and November 2025.

Effective November 2, 2026, the company must implement strict operating restrictions. These include capping vehicle prices at 109% of retail book value for high-risk borrowers for seven years, enhancing risk disclosures, and waiving 95% of sums owed if defaults occur within 12 to 18 months. Credit Acceptance denied any wrongdoing, stating the resolution provides certainty for its business and partners.