Credit Acceptance $710M Settlement: What Auto Loan Borrowers Need to Know

By: Robert J. Nahoum

If you purchased a used car and faced unaffordable monthly payments, hidden fees, or aggressive debt collection after defaulting, you are not alone.

In September 2026, Credit Acceptance Corporation (CAC), one of the nation’s largest subprime auto lenders, agreed to a $710 million settlement with a coalition of 40 state Attorneys General and Washington, D.C.. The lawsuit alleged that Credit Acceptance engaged in predatory auto lending, trapping low-income borrowers in auto loans designed to fail.

As a consumer protection law firm representing individuals ripped off by auto dealers, we regularly see how predatory auto financing ruins financial lives. Here is what you need to know about Credit Acceptance, what this settlement entails, and how to protect yourself.

Who Is Credit Acceptance Corporation?

Credit Acceptance Corporation (CAC) is a publicly traded subprime indirect auto finance company based in Southfield, Michigan. Unlike traditional banks or credit unions, Credit Acceptance primarily operates through a network of independent and franchise automobile dealerships.

They specialize in financing vehicles for buyers with bad credit or no credit history. Under CAC’s model, the dealer approves the financing using CAC’s proprietary underwriting software.

How the Predatory “Set Up to Fail” Model Worked

According to the state law enforcement agencies, Credit Acceptance’s business model was structured around high-risk loans:

Inflated Interest Rates & Financing: CAC originated auto loans with excessive interest rates.
Hidden Dealer Add-ons: The lender permitted auto dealers to pack loans with expensive, optional add-on products such as Guaranteed Asset Protection (GAP) insurance and vehicle service contracts (extended warranties), often without clear disclosure or consent.
Repo and Re-Lending Cycle: State investigations alleged CAC predicted that many borrowers would be unable to repay even the loan principal. Despite expecting defaults, CAC found the loans profitable by collecting initial payments, repossessing the car upon default, and reselling it through dealerships to repeat the cycle.

If you suspect you were tricked during a car purchase, explore our overview on unscrupulous car dealer tricks and deceptive sales tactics to see if your legal rights were violated.

Key Terms of the $710 Million Settlement

The $710 million agreement imposes immediate debt relief, cash restitution, and mandatory reforms on Credit Acceptance’s lending operations.

Settlement Component	Details
Debt Forgiveness	$634 million in principal balances forgiven for over 55,000 borrowers with loans originated between November 2015 and November 2025.
Consumer Restitution	$60 million paid into a fund administered by state AGs to provide cash refunds to harmed consumers.
Government Penalties	$15.5 million in civil penalties and state costs.
New Borrower Warnings	CAC must notify prospective buyers if its internal metrics indicate a high historical risk of default before finalizing the loan.
95% Debt Waiver on Early Default	For high-risk loans that default within the first 12 to 18 months, CAC must waive 95% of the remaining balance.
Deficiency Debt Collection Bans	CAC is prohibited from suing borrowers or selling the remaining debt to third-party collection agencies on those high-risk defaulted loans.

(Note: Credit Acceptance agreed to the consent judgments without admitting wrongdoing or fault.)

How Does the Settlement Impact Affected Borrowers?

If you had an auto loan through Credit Acceptance:

You Do Not Need to File a Claim: State administrators and Credit Acceptance will directly contact eligible borrowers who qualify for debt forgiveness or cash refunds.
Keep Making Payments Unless Notified: CAC has clarified that the majority of open accounts (over 97%) are not affected. You must continue making regularly scheduled payments unless you receive official written notification from the settlement administrator stating your debt was forgiven.
Watch Out for Scams: Neither Credit Acceptance nor state officials will ever ask you to pay a fee to receive settlement funds or debt relief.

What to Do If You Were Ripped Off by an Auto Dealer

While this multi-state settlement addresses Credit Acceptance’s practices, individual auto dealers routinely violate state and federal consumer protection laws independently. Common illegal dealership practices include:

Yo-Yo Financing / Spot Delivery Scams: Calling you back days after driving off the lot to claim your financing fell through and demanding a higher down payment or interest rate.
Packing the Contract: Adding undisclosed charges for warranties, gap insurance, or paint protection that you never agreed to buy.
Undisclosed Vehicle History: Selling prior wreck, frame-damaged, flood-damaged, or lemon vehicles without telling you.
Odometer Fraud & Price Markup: Charging thousands above the agreed-upon sticker price or tampering with vehicle disclosures.

If you are dealing with predatory auto loan debt, aggressive collection efforts, or deceptive dealership practices, you have rights under state consumer fraud laws, the Truth in Lending Act (TILA), and the Fair Debt Collection Practices Act (FDCPA).

Fight Back Against Unfair Auto Lending Practices

Don’t let abusive lenders or deceptive auto dealers ruin your credit and trap you in debt. If you suspect an auto dealer lied about your loan terms, inflated fees, or tricked you into an unaffordable contract, contact our office today.

Contact the Law Office of Richard A. Nahoum, P.C. for a free consultation to discuss your legal options and hold predatory lenders accountable.

How The Law Offices of Robert J. Nahoum, P.C. Can Help

At The Law Offices of Robert J. Nahoum, P.C., we represent consumers who have been ripped off by deceptive auto dealers across New Jersey and New York. Because state and federal laws contain fee-shifting provisions, holding dishonest car dealerships accountable often costs consumers nothing out-of-pocket.

If you suspect an auto dealer forged your signature or altered contract terms on your vehicle purchase, visit our New Jersey Auto Dealer Fraud Practice Page to learn more about your rights, or contact our office today for a free case evaluation.