Drivers are getting a $694 million settlement over predatory auto loans
Credit Acceptance Corporation (CAC), one of the biggest auto finance companies in the U.S., has agreed to a $694 million settlement with 41 state attorneys general over allegations that it pushed risky auto loans onto consumers who could not reasonably afford them. The deal will send $60 million in cash restitution to consumers and provide another $634 million in debt relief. And to top it off, some people could actually get to keep their cars.
Some loans were doomed from the start
CAC specializes in auto loans for people with limited or damaged credit histories. According to the states' investigation, CAC assigned its loans a proprietary “score” predicting how much of the loan the company expected to collect.
The problem is that attorneys general allege CAC sometimes approved loans with such low scores that the company predicted it wouldn't even recover the original principal. Those borrowers frequently defaulted. Their cars were then repossessed and sold at auction, leaving some consumers without a vehicle and still dealing with the financial fallout.
The settlement resolves those allegations without requiring CAC to admit wrongdoing.
The settlement gets interesting for people who still owe money
For certain risky CAC loans issued between November 1, 2015, and November 30, 2025, the company must provide $388 million in debt relief for consumers whose cars were repossessed and $246 million in debt relief for consumers whose cars were not repossessed, allowing them to keep their vehicles. The company must also pay $60 million in cash restitution for consumers who received particularly risky loans, as well as $15 million to the states involved in the settlement.
The agreement takes effect November 2, 2026.
The mystery extras
The investigation also focused on something called “packing.” That is when dealers add products such as Vehicle Service Contracts or Guaranteed Asset Protection coverage to an auto-loan contract. The states allege some dealers aggressively sold these products alongside CAC financing even when consumers didn't realize they were buying them or were led to believe the products were required to get the loan.
Under the settlement, CAC must introduce clearer pre-purchase disclosures, make cancellations easier, and monitor dealers more closely. So the days of discovering an expensive add-on buried somewhere in your car paperwork are supposed to get harder.
CAC also has to change how it handles risky loans
For certain risky CAC loans made from December 2025 onward, qualifying borrowers will eventually get an “off-ramp” if their loans fail quickly. They will receive 95% debt relief, and CAC won't be allowed to sue them for the remaining debt. That program will run for five years beginning November 2, 2026.
CAC must also give consumers more information before they take out a loan, including disclosures about the risk of default and the vehicle's value.
For certain consumers, the company will have to cap vehicle prices at 109% of retail book value for seven years. It must also implement measures aimed at stopping dealers from charging consumers more because of their creditworthiness or more than an advertised price.
Meanwhile, consumers who qualify for debt relief will be notified directly by CAC. Those eligible for cash restitution will be contacted by a claims administrator. The settlement covers consumers across the 40 states plus the District of Columbia involved in the multistate action.
Source: CT.gov
